passion for healthcare - hmi.com.sgvision improving lives through quality healthcare to be a leading...

PASSION FOR HEALTHCARE

Annual Report 2016

VISIONImproving lives throughquality healthcare

To be a leading regional healthcare company committed to the deliveryof quality services with care andcompassion, that:• Creates sustainable stakeholder value;• Improves the quality of human life;• Adheres to the highest ethical standards; and• Attracts and develops quality human capital

MISSION

Health Management International Ltd

Annual Report 2016

01 Providing Quality Healthcare Across the Region

02 Corporate Structure

03 Corporate Information

04 Highlights of The Financial Year

05 5-Year Financial Highlights

06 Chairman’s Message

08 Board of Directors

10 Senior Management

14 Group CEO’s Message

– Review of Operations

25 Code of Corporate Governance Report

41 Financial Contents

PROVIDING QUALITY HEALTHCARE ACROSS THE REGION

Health Management International Ltd (“HMI” or the “Group”) is a growing private healthcare provider with presence in Singapore, Malaysia and Indonesia.The Group’s key assets comprise of two tertiary hospitals in Malaysia, the 288 bed capacity Mahkota Medical Centre (“Mahkota”) in Malacca and the 218 bed capacity Regency Specialist Hospital (“Regency”) in Johor. The hospitals are supported by a network of 17 patient referral centres across the region.

The Group also owns and operates the HMI Institute of Health Sciences in Singapore.

CONTENTS

01


CORPORATE STRUCTURE

61%(a)

100%

49%(a)

02

Represents effective shareholding; HMI is the single largest shareholder and has Board and management control.

(a)

Annual Report 2016

CORPORATE INFORMATION

Board of DirectorsDr Gan See KhemExecutive Chairman andManaging Director

Ms Chin Wei JiaExecutive Director andGroup Chief Executive Officer

Mr Chin Wei YaoExecutive Director andGroup Chief Financial Officer

Professor Annie KohLead Independent Director

Dr Cheah Way MunIndependent Non-Executive Director

Professor Tan Chin TiongIndependent Non-Executive Director

Audit and Risk ManagementCommitteeProfessor Annie Koh - ChairmanProfessor Tan Chin TiongDr Cheah Way Mun

Nominating CommitteeProfessor Tan Chin Tiong - ChairmanProfessor Annie KohDr Cheah Way Mun

Remuneration CommitteeProfessor Tan Chin Tiong - ChairmanProfessor Annie KohDr Cheah Way Mun

Registered Office7 Temasek Boulevard #12-10Suntec Tower OneSingapore 038987Tel: (65) 6804 9888Fax: (65) 6253 8259Website: www.hmi.com.sg

Company SecretaryMs Noraini BinteNoor Mohamed Abdul Latiff

Share RegistrarBoardroom Corporate & AdvisoryServices Pte Ltd50 Raffles Place #32-01Singapore Land TowerSingapore 048623Tel: (65) 6536 5355

Independent AuditorPricewaterhouseCoopers LLP8 Cross Street #17-00PWC BuildingSingapore 048424Tel: (65) 6236 3388

Audit Partner-in-charge:Ms Tan Khiaw NgohYear of appointment: 2013

03


HIGHLIGHTS OF THE FINANCIAL YEAR

04

.

We have close to

500 bedsacross

2 hospitalsand

17 patient referral centres in the region.

In FY2016, we have

1,500employees

and

200 practicingconsultants who

treated more than 400,000

patients.

Over the years, we won

18 awards, performed over

135,000 surgeries

and trained more than

110,000 individuals

in life saving skills.

We are confident of our future.

Annual Report 2016

5-YEAR FINANCIAL HIGHLIGHTS

05

in RMm

in RMm

in RMm

in RM cents

Mahkota Medical CentreRegency Specialist HospitalHMI Institute of Health Sciences

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

REVENUE

EBITDA (a)

PATMI

209.2

245.4

292.9

345.2

397.8

29.3

42.0

(0.5)

(0.08)

7.6

1.31

16.0

2.78

27.6

4.79

19.9

60.9

74.6

84.5

15.2%

13.4%

(28.0%)

3.45

Revenue Revenue Growth

Earnings Before Interest, Taxes, Depreciation and Amortisation ("EBITDA") (a)

EBITDA Margin

Net Profit After Tax ("NPAT")Net Profit Attributable to Equity Holders ("PATMI")Basic Earnings per Share

Total DebtNet Debt / (Net Cash)Net Debt / (Net Cash) / EBITDA

Growth Rates

2.4%

62.1%35.5%

Revenue ContributionGroup Revenue

Group EBITDA (a)

Group PATMI

Group Basic EPS

Units FY2012 FY2013 FY2014 FY2015 FY2016

RM'000%

RM'000

%

RM'000RM'000

RM cents

RM'000RM'000

x

209,221

29,298

14.0%

8,133(481)(0.08)

69,85563,320

2.2x

245,41517.3%

41,998

17.1%

19,1717,5741.31

63,64853,949

1.3x

292,91219.4%

60,896

20.8%

36,04216,027

2.78

55,37829,401

0.5x

345,224 17.9%

74,567

21.6%

53,35727,643

4.79

40,5761,500

0.0x

397,81015.2%

84,531

21.2%

45,45119,899

3.45

41,857(37,071)

(0.4x)

EBITDA is adjusted for effects of asset restructuring exercise undertaken in FY2015 and excludes net currency gains or losses and share of profit of associated corporations.

(a)


CHAIRMAN’S MESSAGE

06

Dear Shareholders,

On behalf of the Board and Management, we would like to thank you for your continued support in the financial year ended 30 June 2016 (“FY2016”).

The past year saw challenging conditions in Asia across various markets and sectors. In Malaysia, where our hospitals operate, an economic slowdown, the weakened Malaysian Ringgit and the introduction of a Goods and Services Tax (“GST”) dampened consumer confidence and spending as well as increased operating costs. The opening of new private hospitals in Malaysia also intensified competition for patients, medical consultants and specialised healthcare professionals.

Against this backdrop, the resilient business model of our hospitals nonetheless enabled us to continue to deliver strong and credible results. For FY2016, group revenue grew by 15.2% to a new record revenue of RM 397.8 million, and profit after tax attributable to shareholders stands at RM 19.9 million. As a result of the Group’s financial performance and strong balance sheet, the Board is pleased to propose a final ordinary dividend of 0.75 RM cents per share for FY2016.

Providing Quality Healthcare to our Local Communities

Over the years, HMI has grown both of our Malaysian hospitals, Mahkota Medical Centre (“Mahkota”) and Regency Specialist Hospital (“Regency”), into prominent tertiary hospitals serving the local communities in Malacca and Johor as well as patients from across the region. Our hospitals see more than 400,000 patients a year and we have more than 200 practising consultants across a wide range of medical and surgical disciplines.

It is our firm belief that our hospitals must support their local communities, and we do this through a variety of channels, including health education talks, health awareness activities as well as community service. Around 80% of our Group’s patient load consists of the local population living in or around the states within which our hospitals operate. We believe in the importance of continuously reaching out and extending a helping hand to the underprivileged. This also enables us to grow and develop our capabilities through the support of our communities.

We have remained focused on building our talent pool and succession planning within the Group to propel us forward over the coming years. We believe that a strong Management team will enable the sustainable growth of our Group. In order to offer quality services to our patients, the Management continues to focus on recruiting skilled consultants to practise at our hospitals, and seek to continually improve patient care and experience.

The Growing Malaysian Medical Tourism Market

Apart from our local patient load, we are also confident that Malaysian healthcare offers a unique value proposition to patients from around the region. This is due to the availability of skilled medical personnel, high quality facilities and cost competitiveness. According to Frost & Sullivan, Malaysia’s medical tourism market is set to grow at a forecasted CAGR of 18.5% between 2014 and 2020. Currently, around 20% of our Group’s patient load consists of international patients seeking medical treatment at our hospitals.

Since embarking on its medical tourism efforts in 1999, Mahkota is now one of the leading medical tourism hospitals in Malaysia. As a stand-alone hospital, Mahkota is estimated to attract about 10% of the total number of medical tourists seeking treatment in Malaysia. Situated within the historic city centre of Malacca, international patients are able to obtain quality healthcare services at a cost competitive price, as well as enjoy the food, accommodation and tourist sights all within walking distance to the hospital. Mahkota has also developed a fully integrated logistical support service for our international patient’s journey, starting from before they book their treatment all the way to follow-up after they leave the hospital.

Dr Gan See Khem

Annual Report 2016

07

Our second hospital, Regency, has more recently started its marketing outreach to international patients. Into its 7th year of operations, Regency had spent its initial years focused on developing a wide range of specialties, building a strong operations team and providing healthcare services to the local community. Having achieved its initial objectives, Regency is now ready to offer services to meet the needs of international patients, in particular from Indonesia and the nearby Singapore.

The Next Phase of Growth

The two hospitals in our Group are now at different phases of growth.

For Mahkota, our focus is on the further development of Centres of Excellence (“COEs”) within the hospital. This enables us to provide holistic care to patients for various conditions such as cancer and heart, and treat complex cases by combining the expertise of the various specialists and sub-specialists at Mahkota. We continue to invest in new services and recruit new sub-specialists, with the aim to be a truly comprehensive tertiary hospital serving patients locally and from around the region. We will also continue to build clinical services and inpatient bed capacity within the existing hospital building, so as to maximise the current facilities before undertaking the next phase of expansion.

For Regency, due to strong patient demand and a smaller sized building than Mahkota, the next phase of growth necessitates the construction of a new hospital extension wing. This hospital extension wing will more than double existing capacity at the hospital. This will allow Regency to continue growing its pool of practising consultants and patient load over the many years to come, as well as give Regency the ability to offer more services with the aim of becoming another comprehensive tertiary care hospital such as Mahkota.

Apart from organic growth, the Group continues to search opportunistically for new inorganic growth initiatives in the healthcare sector. This is aided by our strong balance sheet which is in a net cash position, as well as a dedicated Management team. The Group continues to see good long-term prospects for the healthcare sector in the region.

Our Thanks & Appreciation

I would like to sincerely thank all our customers, business partners, and other stakeholders for another year of strong support. Special appreciation is also extended to the Ministry of Health, government agencies and community organisations in Singapore and Malaysia for their continued support for the initiatives undertaken by the Group.

We also greatly appreciate the wisdom and oversight provided by our Board. During the year, we welcomed Professor Annie Koh onto the Board, and would like to sincerely thank Mr Andy Gan who stepped down from the Board for his numerous years of service.

I would also like to thank our consultants, Management and staff for your dedication. Your care for our customers truly is integral to the continued growth of the Group.

Dr Gan See KhemExecutive Chairman and Managing DirectorHealth Management International Ltd


Dr Gan See Khem

Executive Chairman and Managing Director

Date of first appointment as a Director: 26 January 1999Date of appointment as Managing Director: 1 July 1999Date of last re-appointment as a Director: n/a Length of service as a Director (as at 30 June 2016): 17 years 5 months

Dr Gan See Khem is the Executive Chairman and Managing Director of Health Management International Ltd (“HMI”). She has been instrumental in spearheading the Group’s healthcare and education businesses since 1999.

Dr Gan is an active figure in public services and currently serves on the Malaysia-Singapore Business Council. She served as the first woman President of the Singapore Gan Clan Association and is distinguished as one of the first two women to become a council member at the Singapore Chinese Chamber of Commerce and Industry in 1995. Dr Gan is a former Nominated Member of Parliament of the Republic of Singapore.

She was also previously on the Board of Trustees of the Institute of South East Asian Studies and Singapore Management University (“SMU”), and was a member of the International Advisory Board of Curtin Business School. In 2015, Dr Gan received the SG50 Outstanding Chinese Business Pioneers Award from the Singapore Chinese Chamber of Commerce and Industry.

Dr Gan specialised in strategic planning and management during her 15-year tenure at the National University of Singapore. She holds a PhD in Business Administration from the University of Sheffield, United Kingdom.

Ms Chin Wei Jia was appointed as an Executive Director of HMI in October 2014 and as Group Chief Executive Officer (“CEO”) of HMI in September 2015. As Group CEO, she oversees and leads the strategic and operational activities of the Group. She is also the Managing Director of Mahkota Medical Centre (“Mahkota”) and Regency Specialist Hospital (“Regency”).

Ms Chin first joined HMI in 2002 and has played a key role in the development of HMI into a SGX mainboard listed healthcare company. She had contributed to the start of HMI’s education business via the launch of HMI Institute of Health Sciences. Ms Chin was also a member of the core team that first commissioned

Regency in 2008, and previously served as CEO of Regency from 2013 to early 2016. She also led the establishment of HMI’s Medisave accredited referral centre to enable HMI hospitals to provide overseas hospitalisation and day surgeries under the Singapore Medisave scheme.

Ms Chin holds a Bachelor of Arts (summa cum laude) in Economics and International Relations from Boston University, USA. She also has a Masters of Arts in International Relations from Johns Hopkins University, USA.

Ms Chin is the daughter of the Executive Chairman, Dr Gan See Khem and the sister of the Group Chief Financial Officer, Mr Chin Wei Yao.

Ms Chin Wei Jia

Executive Director and Group Chief Executive Officer

Date of first appointment as a Director: 28 October 2014 Date of appointment as Group CEO: 30 September 2015 Date of last re-appointment as a Director: 22 October 2015Length of service as a Director (as at 30 June 2016): 1 year 8 months

08

BOARD OF DIRECTORS

Ms Chin Wei Jia / Professor Annie Koh / Dr Gan See Khem / Dr Cheah Way Mun / Mr Chin Wei Yao / Professor Tan Chin Tiong

Annual Report 2016

Mr Chin Wei Yao

Executive Director and Group Chief Financial Officer

Date of first appointment as a Director: 23 October 2015Date of last re-appointment as a Director: n/a Length of service as a Director (as at 30 June 2016): 8 months

Professor Tan Chin Tiong

Independent Non-Executive Director

Date of first appointment as a Director: 8 September 1999Date of last re-appointment as a Director: 30 October 2013Length of service as a Director (as at 30 June 2016): 16 years 9 months

Professor Tan Chin Tiong is an Independent Non-Executive Director of HMI. He is the Chairman of the Remuneration Committee and Nominating Committee. He is also a member of the Audit and Risk Management Committee.

He was the Founding President of Singapore Institute of Technology and the Founding Provost of SMU.

Professor Tan is currently the senior advisor to the President of SMU. He is also a professor of marketing and has co-authored

several books on marketing and business and consulted for corporations around the world.

Professor Tan is an Independent Director of MYP Ltd.

Professor Tan holds a PhD from the Pennsylvania State University, USA.

Dr Cheah Way Mun is an Independent Non-Executive Director of HMI. He is also a member of the Audit and Risk Management Committee, Remuneration Committee and Nominating Committee.

Dr Cheah is an accomplished ophthalmic surgeon in private practice. He was previously the head of the eye department of Tan Tock Seng Hospital and a visiting consultant of the National University Hospital and the Singapore National Eye Centre.

Dr Cheah holds an MBBS from the then University of Singapore and is a fellow of the Royal College of Surgeons (Glasgow and Edinburgh) and the American Academy of Ophthalmology.

Dr Cheah Way Mun

Independent Non-Executive Director

Date of first appointment as a Director: 8 September 1999Date of last re-appointment as a Director: 28 October 2014Length of service as a Director (as at 30 June 2016): 16 years 9 months

09

Mr Chin Wei Yao was appointed as an Executive Director of HMI in October 2015 and as Group Chief Financial Officer with effect from October 2016. He is responsible for the Group’s overall financial reporting matters and driving the development of the Group’s healthcare services business. Mr Chin is also an Executive Director of Mahkota .

Prior to joining HMI, Mr Chin worked for 8 years in private equity and investment banking in South East Asia. His last position was Associate Director at KV Asia Capital where he was responsible for investment execution and portfolio management. He was previously a Vice President at Sindicatum Sustainable

Resources Group where he oversaw a portfolio of clean energy investments. Mr Chin started out his career as an investment banker at Credit Suisse in 2007.

Mr Chin holds a Bachelor of Arts (summa cum laude) in Economics (Honours) from New York University, USA. He is also an affiliate member of the Association Chartered Certified Accountants (“ACCA”).

Mr Chin is the son of the Executive Chairman, Dr Gan See Khem and the brother of the Group Chief Executive Officer, Ms Chin Wei Jia.

Professor Annie Koh is the Lead Independent Director of HMI. She is also the Chairman of the Audit and Risk Management Committee and a member of the Nominating Committee and Remuneration Committee.

Professor Koh is currently the Vice President for Office of Business Development at SMU and a Practice Professor of Finance holding the position of Academic Director for four university level institutes and centre - the Business Families Institute (BFI), Financial Training Institute (FTI), International Trading Institute (ITI) and Centre for Professional Studies (CPS). She chairs the World Economic Forum Global Agenda Council for Southeast Asia and the Asian Bond Fund 2 Supervisory Committee of the Monetary Authority of Singapore. She is on the investment committee of i-Globe, an independent

director on the board of K1 Ventures Ltd and is a board member of the Family Firm Institute, Inc. and Singapore’s Central Provident Fund Board. Her appointment as a member of SkillsFuture HR Sectoral Tripartite Committee, HR Certification Taskforce, and MOE-WDA Skills Development Council, is testament to her strong linkages to businesses and industry. Professor Koh is a recipient of the prestigious Singapore Public Administration Medal (Bronze) in 2010 and the Public Administration Medal (Silver) in 2016.

Professor Koh holds a PhD in International Finance from Stern School of Business, New York University, USA.

Professor Annie Koh

Lead Independent Director

Date of first appointment as a Director: 1 March 2016Date of last re-appointment as a Director: n/a Length of service as a Director(as at 30 June 2016): 4 months


10

SENIOR MANAGEMENT

11

1

10

11

22

43 5

6 7

10

8 9

3 Mr Stanley LamChief Executive OfficerMahkota Medical Centre

2 Mr Chin Wei YaoGroup Chief Financial OfficerHealth Management International LtdExecutive Director of Mahkota Medical Centre

5 Mr Tee Soo KongGeneral ManagerHMI Institute of Health Sciences

4 Mr Gan Boon SanDirector of Technology & Strategic Development Health Management International Ltd Chief Executive OfficerRegency Specialist Hospital

6

7

8

9

Dr Tan Cheng HockMedical DirectorMahkota Medical Centre

Mahkota Medical Centre

Ms May Tan Mei YenChief Financial OfficerMahkota Medical Centre

Mr Kenneth TanDirector of Human ResourcesMahkota Medical Centre

Ms Sally TanGeneral Manager of Patient ServicesMahkota Medical Centre

Dr Teh Peng HooiMedical DirectorRegency Specialist Hospital

Ms Siti Muslehat Bte MustaffaDirector of Patient ServicesRegency Specialist Hospital

1 Ms Chin Wei JiaGroup Chief Executive OfficerHealth Management International LtdManaging Director of Mahkota Medical Centre and Regency Specialist Hospital

Regency Specialist Hospital

Annual Report 2016

Ms Chin Wei Jia

Group Chief Executive OfficerHealth Management International LtdManaging Director of Mahkota Medical Centre and Regency Specialist Hospital

Ms Chin Wei Jia is the Group Chief Executive Officer (“CEO”) of Health Management International Ltd (“HMI”). As Group CEO, she oversees and leads the strategic and operational activities of the Group. She is also the Managing Director of Mahkota Medical Centre (“Mahkota”) and Regency Specialist Hospital (“Regency”).

Ms Chin first joined HMI in 2002 and has played a key role in the development of HMI into a SGX mainboard listed healthcare company. She had contributed to the start of HMI’s education business via the launch of HMI Institute of Health Sciences. Ms Chin was also a member of the core team that first commissioned Regency in 2008, and previously served as CEO of Regency from 2013 to early 2016. She also led the establishment of HMI’s Medisave accredited referral centre to enable HMI hospitals to provide overseas hospitalisation and day surgeries under the Singapore Medisave scheme.

Ms Chin holds a Bachelor of Arts (summa cum laude) in Economics and International Relations from Boston University, USA. She also has a Masters of Arts in International Relations from Johns Hopkins University, USA.

Ms Chin is the daughter of the Executive Chairman, Dr Gan See Khem and the sister of the Group Chief Financial Officer, Mr Chin Wei Yao.

Mr Chin Wei Yao

Group Chief Financial OfficerHealth Management International LtdExecutive Director of Mahkota Medical Centre

Mr Stanley Lam

Chief Executive OfficerMahkota Medical Centre

Mr Chin Wei Yao is the Group Chief Financial Officer of HMI. He is responsible for the Group’s overall financial reporting matters and driving the development of the group’s healthcare services business. Mr Chin is also an Executive Director of Mahkota. Prior to joining HMI, Mr Chin worked for 8 years in private equity and investment banking in South East Asia. His last position was Associate Director at KV Asia Capital where he was responsible for investment execution and portfolio management. He was previously a Vice President at Sindicatum Sustainable Resources Group where he oversaw a portfolio of clean energy investments. Mr Chin started out his career as an investment banker at Credit Suisse in 2007. Mr Chin holds a Bachelor of Arts (summa cum laude) in Economics (Honours) from New York University, USA. He is also an affiliate member of the Association Chartered Certified Accountants (“ACCA”). Mr Chin is the son of the Executive Chairman, Dr Gan See Khem and the brother of the Group Chief Executive Officer, Ms Chin Wei Jia.

Mr Stanley Lam joined Mahkota as Chief Executive Officer in 2013.

Prior to joining Mahkota, Mr Lam started his career with the Pantai Group of Hospitals in 2003 as an accountant in Pantai Cheras, where he rose to the position of CEO of Pantai Hospital Klang in a span of five years. He was subsequently appointed as Deputy CEO of Pantai Hospital Kuala Lumpur in February 2012.

Mr Lam has obtained his ACCA qualification and is also a member of the Institute of Chartered Secretaries & Administrators (“ICSA”).

Mr Gan Boon San joined HMI as Director of Technology and Strategic Development, and Regency as Chief Executive Officer in 2016.

Prior to joining the Group, Mr Gan has worked in the public and private sectors leading international teams and building organisations, delivering results in Asia Pacific over a period of 29 years. His past roles include President of Sun Microsystems Asia South, Vice President of Oracle APAC System Channels and General Manager of Microsoft APAC Public Sector. He has also held several board positions in the past including member of the Board of Governors for Singapore Polytechnic and President Commissioner of PT Sun Microsystems.

Mr Gan was a Singapore National Computer Board scholar and graduated from the University of Wisconsin, Madison, USA with a Bachelor of Science and Masters in Computer Engineering in 1985 and 1986 respectively.Mr Gan Boon San

Director of Technology & Strategic Development Health Management International Ltd Chief Executive OfficerRegency Specialist Hospital 11


Ms Sally Tan

General Manager of Patient ServicesMahkota Medical Centre

Ms May Tan Mei Yen

Chief Financial OfficerMahkota Medical Centre

Dr Tan Cheng Hock

Medical DirectorMahkota Medical Centre

Dr Tan Cheng Hock joined Mahkota as its Medical Director in 2006.

Dr Tan began his career as a lecturer in University Malaya before starting his private practice as a consultant in Obstetrics & Gynaecology in 1980. He has also been lecturing part time in Melaka Manipal Medical College since 2000 and was member of the Board of Directors in Southern Hospital until 2007.

In 1977, the Malaysia nation’s first intrauterine fetal transfusion was performed by Dr Tan Cheng Hock with assistance by a doctor and with the aid of fluoroscopy.

Dr Tan graduated with a Bachelor of Medicine and Bachelor of Surgery (“MBBS”) from the University of Sydney in 1968. He is a Fellow of Royal College of Obstetrics & Gynaecology (London) and a life member of the Malaysian Medical Association.

Ms Sally Tan is the General Manager, Patient Services of Mahkota. She is responsible for a broad range of the hospital’s services including Nursing, Medical Records, Haemodialysis, Diagnostic Day Procedures, Diabetic Care, International and local marketing and Hospital Occupational Safety and Health. She is also a qualified Safety Health Officer. She first joined Mahkota in 1994 as a Head Nurse in the Critical Care Unit and has rose through several managerial roles to her current position in 2008. She was previously a clinical instructor at the Nursing College Melaka and a State Registered Nurse at Melaka General Hospital.

Ms Tan has obtained her Master of Business Administration from Edith Cowan University in Australia. She also holds a Diploma in Nursing from Nursing College Melaka and further pursued to obtain the Post Basic course in both Critical Care and Midwifery. Besides this, she holds a Graduate Diploma in Occupational Health and Safety from Queensland University of Technology.

Ms May Tan joined Mahkota in 2010 as Chief Financial Officer. She is responsible for Mahkota’s financial and management accounting functions.

Prior to joining Mahkota, she worked in the assurance industry in the United Kingdom and Malaysia with her last position being a Director in Ernst and Young.

Ms Tan graduated with a Bachelor of Commerce from the University of Melbourne. She is a member of the Institute of Chartered Accountants of Scotland and the Malaysian Institute of Accountants.

12


SENIOR MANAGEMENT

Mr Tee Soo Kong

General ManagerHMI Institute of Health Sciences

Mr Tee is the General Manager of HMI Institute of Health Sciences (“IHS”). He was previously IHS’s Director of Education and Operations in 2010 before taking on the General Manager role in 2012.

Mr Tee has held various leadership positions in Singapore’s healthcare vocational training industry. He also has more than 25 years of experience that spans across organisations such as the Singapore Armed Forces, voluntary welfare organisations and private healthcare education service providers.

Mr Tee holds a Degree in Education and Training from the University of Melbourne.

Annual Report 2016

Mr Kenneth Tan

Director of Human ResourcesMahkota Medical Centre

Mr Kenneth Tan joined Mahkota in April 2015 as Director, Human Resources. He provides a leadership role in Human Resource (“HR”) strategies and roadmap implementation for the hospital.

Prior to joining Mahkota, Mr Tan was the Corporate HR Director of the Harita Group, an Indonesian conglomerate, and was based in Jakarta for four years. Prior to that, Mr Tan was the Asia Pacific Zone HR Director for Bureau Veritas.

He holds a Bachelor of Business in Business Administration from RMIT University and has a post-graduate Diploma in Management from the Malaysia Institute of Management.

13

Ms Siti Muslehat Bte Mustaffa

Director of Patient ServicesRegency Specialist Hospital

Ms Siti Muslehat Mustaffa joined Regency in 2013 as Director, Patient Services. Her areas of responsibility includes Quality & Innovation, Infection Control, Medical Records, Operation Theatre, Central Sterile Supplies and Invasive Cardiac Laboratory. She led Regency to achieve ISO 9001:2008 Accreditation in March 2016 and is currently steering the hospital’s quality journey towards meeting the accreditation requirements for the Malaysian Society for Quality in Health (“MSQH”).

Ms Siti has over 30 years working experience in the healthcare sector. Prior to joining Regency, she held various management and teaching positions in a major hospital and tertiary teaching institution in Singapore.

A nurse by profession, Ms Siti is a registered nurse with the Singapore Nursing Board. She has a Bachelor of Health Sciences (Nursing) and Master of Health Science (Management) from the University of Sydney. Ms Siti also has a Post-Graduate Diploma in Higher Education from the National Institute of Education (Singapore).


Dr Teh Peng Hooi has been the Medical Director of Regency since 2009.

Dr Teh is a practising consultant orthopaedic surgeon in private practice in Singapore and Malaysia (Regency). He is also an honorary visiting consultant orthopaedic surgeon at Hospital Sultanah Aminah in Johor Bahru. Dr Teh is currently the Chairman of National St John Council of Singapore as well as the Prior of the Priory of Singapore of The Order of St John.

Dr Teh has an MBBS from the University of Singapore. He is a Fellow of the Royal College of Surgeons (Edinburgh), as well as a Fellow of the Academy of Medicine, Singapore.

Dr Teh Peng Hooi

Medical DirectorRegency Specialist Hospital


Ms Chin Wei Jia

GROUP CEO’S MESSAGE – REVIEW OF OPERATIONS

Dear Shareholders,

The Group delivered yet another strong financial and operational performance for the financial year ended 30 June 2016 (“FY2016”). Our two hospitals in Malaysia, Mahkota Medical Centre (“Mahkota”) and Regency Specialist Hospital (“Regency”) continued to grow in terms of number of practising specialist consultants, patient volume and revenue intensity. As a Group, we saw more than 400,000 patients in FY2016, of which around 20% were international patients, with a trend towards more complex surgeries performed at our hospitals. This reflects our commitment towards delivering quality healthcare for all of our patients.

Delivering Financial Performance

During the year under review, the Group’s revenue grew 15.2% from RM 345.2 million to RM 397.8 million, while EBITDA increased 13.4% from RM 74.6 million to RM 84.5 million. This strong performance was mainly driven by increased patient load, more specialist consultants recruited and higher average bill sizes per patient at both hospitals. Over the past 5 years, the Group’s revenue has grown at a steady CAGR of 17.4%, underpinned by the strength of our underlying hospital businesses. The growth in revenue coupled with effective cost management, resulted in profit before tax growing 15.7% to RM 63.4 million from RM 54.8 million in the prior year.

Net profit after tax was 14.8% lower from RM 53.4 million in FY2015 to RM 45.5 million in FY2016, due to the higher tax expenses arising from a RM 9.0 million one-off recognition of deferred tax assets by Regency last year, as well as the subsequent utilisation of RM 5.5 million of deferred tax assets by Regency in FY2016. Excluding the impact from deferred taxes, net profit after tax would have been 15.0% higher at RM 51.0 million in FY2016, compared to net profit after tax of RM 44.4 million in FY2015 on an adjusted basis.

As a result, HMI posted lower net profit attributable to equity holders (“PATMI”) of RM 19.9 million in FY2016 compared to RM 27.6 million in the previous year, mainly impacted by deferred tax assets as well as higher general operating costs. Excluding the impact from deferred taxes, FY2016 adjusted PATMI would have been RM 23.3 million, a 5.0% increase from FY2015 adjusted PATMI of RM 22.1 million.

The Group continues to maintain a robust balance sheet with cash and cash equivalents doubling to RM 78.9 million as at 30 June 2016, and ended the year under review in an overall net cash position. This will ensure that the Group is able to comfortably fund our organic expansion plans for the two hospitals, as well as augment the Group’s ability to explore inorganic growth opportunities in the healthcare sector.

Mahkota Medical Centre Maintaining Leading Position in Malaysia

Mahkota is a 288-bed award-winning multidisciplinary tertiary care hospital located in the heart of Malacca, Malaysia. Established in 1994, Mahkota is the largest private hospital in the Southern region of Malaysia with over 120 practising consultants specialising in a broad range of medical and surgical disciplines. A leader in Malaysian medical tourism, Mahkota sees more than 80,000 international patients per year and has an extensive network of 17 patient representative offices in Indonesia, Malaysia and Singapore. The hospital won the Frost & Sullivan “Malaysia Medical Tourism Hospital of the Year” for its second consecutive year in 2016, and is accredited by the Malaysian Society for Quality in Health (“MSQH”).

14

Annual Report 2016

Mahkota will focus on strengthening its market position

as a major one-stop comprehensive care hospital

through expanding its core specialities, attracting new

consultants, further developing its Centres of Excellence

(“COEs”), maximising utilisation of its existing facilities,

as well as further developing its pool of skilled healthcare

and operations staff

MAHKOTA MEDICAL CENTRE

15


In FY2016, Mahkota continued to grow its revenue by 8.3%, from RM 229.0 million to RM 248.0 million, with EBITDA increasing 11.8%, from RM 61.0 million to RM 68.2 million. Patient load increased by 1.9% to around 295,000 in FY2016, despite a general slow-down in the economy following the currency depreciation and implementation of a Goods and Services Tax (“GST”) in Malaysia.

Focusing on Developing Centres of Excellence

Mahkota continued its trend of recruiting experienced consultants to practise at the hospital, and welcomed new consultants from various specialities and sub-specialties including Cardiology, Paediatrics & Neonatology and more.

During the year under review, the hospital further developed the Mahkota Women and Child Centre with the launch of the new neonatology service. This makes Mahkota the first and only private hospital offering this sub-specialty service in Malacca, and is line with the Group’s strategy to continually enhance Mahkota’s Centres of Excellence (“COEs”).

The hospital also focused on enhancing the Mahkota Cancer Centre, with the addition of a new Positron Emission Tomography (“PET”) scanner that introduces complementary nuclear medicine services to the existing range of cancer treatments available at the hospital.

In addition, Mahkota also established three new COEs in the year under review. The Mahkota Emergency & Trauma Centre, spearheaded by Emergency Specialists, specialises in attending to emergency cases that comprise mainly acute illnesses or injuries requiring immediate attention. The Mahkota Liver & Gastro Centre was established to manage a wide spectrum of liver and gastroenterology diseases of varying severity within a well-equipped facility. The Mahkota Diabetes Centre was officially launched in conjunction with World Diabetes Day 2016 to provide comprehensive holistic services tailored towards diabetic care.

Enhancing Service Delivery

A new day surgery centre, which houses minor operating theatres and day recovery beds, was launched during the year to enable Mahkota to handle more day surgery cases and facilitate a more seamless experience for patients undergoing day surgeries. This is in line with the growing trend in private healthcare for day surgery services.

In addition, new business counters for corporate and insurance patients were set up at the hospital to reduce patient waiting time. Also, customer service at Mahkota was further enhanced through the provision of additional personalised logistical support for international patients.

Growing in Strength and Capability

Going forward, Mahkota will focus on strengthening its market position as a major one-stop comprehensive care hospital through expanding its core specialities, attracting new consultants, further developing its COEs, maximising utilisation of its existing facilities, as well as further developing its pool of skilled healthcare and operations staff. The hospital will also increase inpatient bed capacity in 2017.


16

Annual Report 2016

Regency will continue to focus on differentiating

itself from other competitors by growing its

key disciplines, recruiting new consultants,

launching new services, enhancing patient

experience and expanding its marketing

network both locally and overseas

REGENCY SPECIALIST

HOSPITAL

17


Regency Specialist HospitalMaintaining Position as One of the Fastest Growing Private Hospitals in Malaysia

Launched in late 2009, Regency is a 218-bed tertiary care hospital with over 70 practising consultants located within Iskandar in Johor, Malaysia. The hospital is approximately 15 minutes’ drive from the Singapore-Woodlands Checkpoint and Johor Bahru City Centre. It is also the closest tertiary hospital to the Pasir Gudang industrial area and the new RM 60 billion Petronas oil refinery and petrochemical integrated development (“RAPID”) complex. Given its proximity to both residential and industrial areas, Regency is also strategically positioned as the only private hospital in Malaysia to have a 24-hour Emergency & Trauma Centre staffed by Emergency Specialists. During the year, Regency successfully achieved the ISO 9001:2008 accreditation and aims to achieve MSQH accreditation in the next year.

In FY2016, Regency continued its fast paced growth with revenue growing 27.8% from RM 110.9 million to RM 141.7 million, and EBITDA increasing 45.8% from RM 19.2 million to RM 28.0 million. Patient load in FY2016 was around 114,000, 13.9% higher as compared to around 100,000 in the previous year, and was driven largely by new consultants recruited and increased marketing efforts. Regency has started to tap on Mahkota’s existing overseas representative offices network and the hospital has seen an increase in its international patient load.

Enhancing Service Delivery

In the year under review, Regency’s open heart surgery programme continued to grow strongly and the Regency Heart Centre was launched in conjunction with World Heart Day 2015. Also, a new aesthetic service was set up to provide more holistic services to patients.

To cope with high occupancy rates, Regency continued to increase its number of operational inpatient beds. Also, to improve patient experience, the hospital has started refurbishing its wards to improve ambience and nursing work flow. In the next year, Regency will develop more clinic suites to house new consultants joining the hospital, open a new ward to cope with increasing patient demand, and set up an Admission and Discharge Lounge to improve patient services.

Increasing Capacity and Capability

In view of strong patient demand and growth, the initial plans for construction of a new medical outpatient block (with mainly clinic suites and outpatient services areas) for Regency has been expanded and re-designed to become a hospital extension block instead. This new extension block will be seamlessly linked to the existing hospital building, and will more than double the existing capacity of Regency with more inpatient beds, critical care facilities, clinical services areas, operating theatre capacity as well as clinic suites for sale or rental to doctors. At the same time, a cancer centre will be developed to provide radiotherapy services, further enhancing Regency’s suite of oncology treatments. Construction is expected to commence in 2017, and the hospital extension block is expected to be completed in two and a half years.

Differentiating for Future Growth

With the rapid development of Iskandar Malaysia and entry of new hospitals, the competition faced by Regency has intensified and is expected to further intensify over the next few years. However, Regency will continue to focus on differentiating itself from other competitors by growing its key disciplines, recruiting new consultants, launching new services, enhancing patient experience and expanding its marketing network both locally and overseas. In addition, the new hospital extension block will increase capacity as well as better position Regency for its next phase of growth.

18


Artist impression of the Regency hospital extension block

Annual Report 2016

HMI Institute of Health Sciences

HMI Institute of Health Sciences (“HMI Institute”) is one of only two Singapore Workforce Development Agency appointed Continuing Education and Training (“CET”) centres for the healthcare support sector in Singapore. Since inception, HMI Institute has trained more than 1,800 Workforce Skills Qualification (“WSQ”) healthcare support trainees and more than 110,000 individuals in life saving skills.

HMI Institute’s revenue grew marginally in FY2016 to RM 9.5 million, and the institute successfully secured a few major training contracts that aims towards achieving 150,000 individuals trained in life saving skills by the end of 2017. HMI Institute also achieved a four-year renewal for the Enhanced Registration Framework registration with the Singapore Council for Private Education.

In September 2016, HMI Institute relocated to its new training facility at Devan Nair Institute for Employment and Employability. The advanced purpose-built training centre models actual healthcare working environments such as an operating theatre, hospital wards and physiotherapy areas. This allows authentic and experiential learning to take place for students.

Going forward, HMI Institute is pro-actively developing and incorporating blended e-learning capabilities to make healthcare knowledge and continuing professional education more accessible to a larger pool of learners. This is also in line with the Singapore SkillsFuture initiative to promote life-long learning.

19


20

Leveraging on Group Synergies

In view of the increasing competitive environment, the Group will continue to leverage on synergies across two hospitals to drive sustainable growth, performance and value. Key functional areas such as doctor recruitment and marketing will continue to be driven together so as to facilitate sustained growth in patient load.

For operational effectiveness and alignment, areas such as quality assurance, policy and process streamlining, and administrative controls will be pooled together for review and continuous improvement. Currently, the Group is reviewing its information technology system, and is also undertaking a lean six sigma project to improve business processes and reduce patient waiting times.

To maintain cost effectiveness, group procurement of equipment, medical supplies and pharmaceutical drugs will continue to be focused on. Also, the Group is in the midst of developing a core training and development framework for all patient-facing employees so that they can gain the knowledge and skills needed to develop their confidence in caring for and interacting with our customers.

Focusing on People Development

The Group has managed to achieve solid growth through the contributions from our dedicated consultants and doctors as well as our committed team of Management and operations colleagues. We believe that the key determinant of the Group’s long term success is the strength and depth of our talent pool, and are committed to attracting the right talents, and nurturing and retaining them.

As such, the Group has developed the HMI People Development Roadmap that will be implemented over the next 3 years in order to ensure the sustainability of our businesses. The HMI People Development Roadmap focuses on 4 key pillars, namely (i) Leadership Development and Talent Management which includes succession planning for business continuity and sustainable growth, (ii) Continuous Training, Education and Development (“TED”) that encompasses technical, cross functional and soft skills training for all employees so that they can gain the knowledge and skills needed to progress and grow in their chosen career track within the Group, (iii) Competitive Performance-Based Remuneration so as to attract and retain leadership and talent within the Group, and (iv) Good-to-Great and High-Performance Culture so as to provide all employees with a positive and engaging work environment through workplace health promotion activities, internal communication sessions, as well as numerous internal events to celebrate festivities and recognise accomplishments.

The Group also supports the professional development of our consultants, doctors, nurses and allied health professionals. To keep abreast with the latest developments in the medical field, our hospitals support our consultants and doctors in their professional upgrading initiatives, regularly conduct continuing medical and nursing education talks, actively participate in industry-wide conferences and seminars, as well as sponsor nurses and allied health professionals for post-basic training programmes.

Investor Relations

The Group is committed to corporate transparency and effective corporate governance through maintaining open and continuous dialogue with our shareholders, analysts and financial media. The Group regularly furnishes prompt, comprehensive and relevant disclosure in its announcements, circulars to shareholders and annual report. All material information is disclosed in a timely manner and can be accessed via SGXNet and the HMI corporate website (www.hmi.com.sg).


Annual Report 2016

21

During the year, the Group reinvigorated its efforts on greater investor relations and media relations outreach. Members of our senior Management team are directly involved in the Group’s investor relations activities through periodic non-deal roadshows, conferences and investor briefings with financial analysts and institutional fund managers. Going forward, HMI will continue to work to raise the public’s awareness of the Group and build sustainable relationships with the shareholders and the investment community.

Acknowledgements

My team and I would also like to convey our appreciation to our Board of Directors for their insights, direction and stewardship throughout FY2016.

The Group would not have been able to grow its business without our dedicated team of consultants, doctors, nursing and allied health professionals and staff. Your unwavering commitment to excellence will ensure our continued success in the competitive environment that we operate in and we look forward to your continued support as we take the Group to the next level of growth.

Ms Chin Wei JiaGroup Chief Executive Officer and Executive Director Health Management International Ltd


22

PASSION IN HEALTHCARE AND COMMUNITY CORPORATE SOCIAL RESPONSIBILITY


Mahkota Charity Run, 11 October 2015

Mahkota, together with the Malacca Skyhawk Marathon Club, organised its second annual Charity Run 2016 to raise funds for cancer patients. Led by the Mahkota Cancer Centre, the event attracted more than 1,200 participants. The event also raised RM 107,538 for Lee Association’s Youth Caring Fund, a foundation which supports cancer patients requiring financial assistance.

Christmas Celebrations with Lighthouse Children’s Home and Pusat Jagaan Kanak-Kanak Harapan, 21 December 2015

To celebrate Christmas, Mahkota collaborated with the Malacca Tourism Association and the World Youth Foundation to grant special wishes to the underprivileged children from Lighthouse Children’s Home and Pusat Jagaan Kanak-Kanak Harapan, Malacca. A total of 24 wishes, consisting of gifts and treats, from the generous donors were presented to the children during the Christmas party.

Being passionate in healthcare, HMI believes in giving back to the communities in which it serves. In addition to the fundraising activities, we also give back to the community in the form of education and awareness, as well as community service. Season’s festivals, such as Chinese New Year, Hari Raya and Christmas, are always celebrated together with our community.

Annual Report 2016

23

Distribution of “Sembako” or Groceries to Indonesian Communities, June 2016

Beyond the shores of Malacca, Mahkota regularly extends a helping hand to the surrounding local communities in Indonesia where we operate. As part of the outreach activities, Mahkota’s patient representative staff distributed bags of “Sembako” or groceries, consisting of essential daily items such as noodles, to the needy families in Balikpapan, Palembang and Bandung, Indonesia.

Bubur Lambuk distribution, 16 June 2016

An annual affair, Mahkota staff cooked and distributed “Bubur Lambuk” in conjunction with the Muslim fasting month of Ramadhan.


Christmas Celebration with Care Haven Home, 21st December 2015

Regency celebrated Christmas by organizing a special excursion to the Johor Austin Water Theme Park for the underprivileged children from the Care Haven Home, Johor. The children were treated to an afternoon of fun water activities under the sun.

Chinese New Year Celebration with Amithaba Kulai Old Folk’s Home, 21st February 2016

Regency celebrated Chinese New Year with a visit to the Amithaba Kulai Old Folk’s Home, Johor. Regency volunteers spring cleaned the home, and assisted with personal grooming and haircuts for the senior residents. Residents of the home were also treated to a hearty “Prosperity Toast”.


24

Regency World Health Day and Happy Women Carnival, 23rd April 2016

Regency celebrated the World Health Day together with the Happy Women Carnival in April 2016. Held in collaboration with JEIWA (“Johor Empowerment of Intellectual Women Association”), the event highlighted women’s roles in the community and their contributions to health and social development in the community. Regency also launched the Regency Women & Children Centre to provide dedicated women’s and children’s medical care.

PASSION IN HEALTHCARE AND COMMUNITY CORPORATE SOCIAL RESPONSIBILITY

Regency “Jom Masak Bubur Lambuk Amal” event, 16th June 2016

Regency celebrated Hari Raya with the annual Bubur Lambuk cooking event, as a way for the hospital to give back to the community. Together with the Pasir Gudang Municipal Council, Regency had prepared over 6,000 bowls of “Bubur Lambuk” or Malay porridge to distribute to the local community.

Annual Report 2016

25

Code of Corporate GovernanCe report

The Board of Directors (the “Board”) together with the Management of Health Management International Ltd (“HMI” or the “Company” collectively with its subsidiaries, the “Group”) firmly believe that good corporate governance is essential to the success and the sustainability of the Group’s business and performance.

The corporate governance of the Group is built upon principles and guidelines set by:

1) Code of Corporate Governance 2012 (the “Code”);2) Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”)

The Group has adhered to principles and guidelines from the Code to protect shareholders’ interests and enhance long-term shareholders’ value and corporate transparency of the Group.

THE BOARD’S CONDUCT OF AFFAIRSPrinciple 1

Principal Duties of the BoardThe Board oversees businesses and affairs of the Group with the objective of maximising long term shareholders’ value and safe-guarding of shareholders’ and other stakeholders’ interests. The principal duties of the Board include:

1) Deciding on broad policies, strategic directions and objectives of the Company and the Group;2) Approving annual budgets, periodic plans and major investments and divestments;3) Overseeing processes for evaluating the adequacy and effectiveness of internal controls, risk management, financial

reporting and compliance requirements;4) Appointing the Chief Executive Officer (“CEO”), Directors and Senior Management; 5) Monitoring the financial performance of the Company and the Group;6) Setting the Company’s values and standards (including ethical standards); and7) Assuming responsibility for corporate governance and considering sustainability issues such as environmental and social

factors as part of its strategic formulation.

Board ApprovalMatters which are specifically reserved to the Board for approval are:

1) Matters involving a conflict of interest for a substantial shareholder or a Director;2) Material acquisition and disposal of assets;3) Corporate or financial structuring;4) Share issuances, interim dividends, final dividends and other returns to shareholders;5) Matters which require Board’s approval pursuant to the constitution of the Company and the Listing Manual of SGX-ST;

and6) Any major investments and expenditures.

Board CommitteesTo assist the Board in discharging its oversight function, various Board Committees, namely the Audit and Risk Management Committee (“ARMC”), Nominating Committee (“NC”), and Remuneration Committee (“RC”), have been constituted with clear written terms of reference. All the Board Committees are actively engaged and play an important role in ensuring good corporate governance in the Company and within the Group.

Board Orientation and TrainingA formal letter of appointment is provided for every new Director to explain his/her duties and obligations. All newly appointed Directors undergo a comprehensive orientation programme to ensure that they understand their duties as Directors and how to discharge such duties. The Group provides extensive background information about its history, mission and values to the newly appointed Directors. Meetings with Key Management Personnel are also conducted to familiarise the new Directors with the business activities, strategic directions, policies and corporate governance practices of the Group. This includes site visits to the hospitals in Malacca and Johor.


26

As part of the Company’s continuing education programme for all Directors, the Board maintains a policy for any Director to attend relevant seminars and courses conducted by, including without limitation, the Singapore Institute of Directors and SGX-ST, at the Company’s expense.

Board MeetingsThe Board meets regularly and as warranted. The Company adopts a policy whereby Directors are welcome to request the Management to participate in Board meetings to deliver reports to the Board or engage any informal discussions with the Management on any aspect of the Group’s operations or business issues.

The attendances of the Directors and former Director at meetings of the Board and Board Committees, as well as the frequency of such meetings during the financial year ended 30 June 2016, are set out below.

Name

HMI Board

Audit and Risk Management Committee

Nominating Committee

Remuneration Committee

Number of Meetings

Held

Number of Meetings Attended

Number of Meetings

Held


Number of Meetings

Held


Number of Meetings

Held


Dr Gan See Khem 5 5 5 5 2 2 2 2Ms Chin Wei Jia 5 5 5 5 2 2 2 2Mr Chin Wei Yao(1) 5 3 5 3 2 1 2 1Dr Cheah Way Mun 5 4 5 4 2 2 2 2Mr Gan Lai Chiang, Andy(2) 5 4 5 4 2 2 2 2Professor Annie Koh(3) 5 1 5 1 2 0 2 0Professor Tan Chin Tiong 5 5 5 5 2 2 2 2

Note:(1) Mr Chin Wei Yao was appointed as an Executive Director of the Company with effect from 23 October 2015.(2) The number of meetings attended by Mr Gan Lai Chiang, Andy during the period from 1 July 2015 to 1 March 2016. Mr Gan Lai Chiang, Andy,

ceased as an Independent Non-Executive Director of the Company with effect from 1 March 2016.(3) The number of meetings attended by Professor Annie Koh during the period from 1 March 2016 to 30 June 2016. Professor Annie Koh was

appointed as an Independent Non-Executive Director of the Company with effect from 1 March 2016.

BOARD COMPOSITION AND GUIDANCEPrinciple 2

Board Composition, Size and DiversityAs at 30 June 2016, the Board comprises six Directors, namely three Executive Directors and three Independent Non-Executive Directors.

Executive DirectorsDr Gan See KhemMs Chin Wei JiaMr Chin Wei Yao

Independent Non-Executive DirectorsProfessor Annie KohDr Cheah Way MunProfessor Tan Chin Tiong

The composition of the Board is reviewed annually by the NC to ensure that there is an appropriate mix of expertise and experience to enable the Management to benefit from a diverse perspective of issues that are brought before the Board. The Directors provide core competencies in healthcare, education, accounting, finance, business, and management to the Board. The Directors also bring to the Board their industry knowledge and vast experiences in strategic planning and corporate development.


Annual Report 2016

27

The Board is committed to pursuing gender diversity in relation to the composition of the Board. Female candidates are always included for consideration whenever a Board position becomes vacant or additional Directors are required. Having said that, the Company is of the view that gender is but one aspect of diversity and new Directors will continue to be selected on the basis of their experience, skills, knowledge, insight and relevance to the Board. As at 30 June 2016, the Board comprises of three female Directors and the Board is satisfied with the diversity of the Board.

The Board considers that there is a strong independent element in the Board as the number of Independent Non-Executive Directors represent half of the Board as at 30 June 2016. The Board also considers that the current Board size is appropriate for effective decision-making, taking into account the scope and nature of the operations of the Group.

The detailed background and principal commitments of the Directors are set out in pages 8 and 9 of this Annual Report.

Board IndependenceThe Board, at the recommendation of NC, determines on an annual basis whether a Director is independent pursuant to the definition of independence of the Code, that is, an Independent Director is one who has no relationship with the Company, its related corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Directors’ independent business judgment with a view to the best interests of the Company. Under this definition of independence, the NC considers that, apart from Dr Gan See Khem, Ms Chin Wei Jia and Mr Chin Wei Yao, the four Non-Executive Directors, namely Mr Gan Lai Chiang, Andy (resigned on 1 March 2016), Professor Annie Koh (appointed on 1 March 2016), Professor Tan Chin Tiong and Dr Cheah Way Mun are independent pursuant to the Code.

The NC also considers the Non-Executive Directors to be of calibre and adequate in number, and their views to be of sufficient weight that no individual or small group can dominate the Board’s decision-making processes. The Non-Executive Directors have no financial or contractual interests in the Group other than by way of their Directors’ fees and shareholdings in the Company as set out in the Directors’ Statement.

Professor Annie Koh was appointed as an Independent Non-Executive Director on 1 March 2016 and subsequently re-designated as the Lead Independent Director with effect from 1 September 2016. She is also the Chairman of the ARMC and a member of the NC and RC. Professor Tan Chin Tiong is an Independent Director, the Chairman of the RC and NC; and a member of the ARMC. Dr Cheah Way Mun was appointed as the Lead Independent Director on 1 March 2016 and subsequently re-designated as an Independent Director with effect from 1 September 2016. He is a member of the ARMC, RC and NC.

As at 30 June 2016, two of the three Non-Executive Directors have served on the Board for more than nine years. In subjecting the independence of Professor Tan Chin Tiong and Dr Cheah Way Mun to particularly rigorous review, the NC and the Board have (with each of them abstaining from discussion and deliberation on their individual independence) placed more emphasis on whether each of them has demonstrated independent judgment, integrity, professionalism and objectivity in the discharge of his duties rather than imposing a maximum number of years that he should serve.

The NC and the Board have noted that each of the Non-Executive Directors has not hesitated to express his own viewpoints as well as seeking clarification from Management on issues he deems necessary. It is noted that each of them is able to exercise objective judgment on corporate matters independently, in particular from Management and 10% shareholders, notwithstanding that each of them has served more than nine years on the Board. After due consideration and careful assessment, the NC and the Board are of the view that Professor Tan Chin Tiong and Dr Cheah Way Mun remain independent pursuant to the definition of independence in the Code.

Board InformationThe Board and Management firmly believe that an effective and robust Board engages in open and constructive debate and challenges Management on its assumptions and proposals. To facilitate this, the Board, in particular, the Non-Executive Directors, must be well-informed of the Group’s business and affairs, and be knowledgeable about the industry in which the Group’s businesses operate.

With that in mind, regular updates on the developments of the Group are disseminated to the Non-Executive Directors on periodic basis. Informal meetings are also held throughout the financial year to keep Directors updated with prospective deals and potential developments, and before formal Board approval is sought. Further, the Non-Executive Directors meet without the presence of management and Executive Directors, if required, on a need-be basis.



28

CHAIRMAN AND CHIEF EXECUTIVE OFFICERPrinciple 3

During the financial year ended 30 June 2016, Dr Gan See Khem is the Executive Chairman and Managing Director of the Company. Ms Chin Wei Jia was appointed as Group CEO of the Company on 30 September 2015. Ms Chin Wei Jia is the daughter of Dr Gan See Khem, the controlling shareholder, Executive Chairman and Managing Director of the Company, and Dr Chin Koy Nam, the controlling shareholder of the Company, and the sister of Mr Chin Wei Yao, Executive Director and Group Chief Financial Officer (“Group CFO”) of the Company.

Dr Gan See Khem has executive responsibilities for the Group’s business as well as responsibility for the working of the Board and ensures that procedures are introduced to comply with the Code. Dr Gan See Khem has played an instrumental role in developing the business of the Group and has also provided the Group with sound and strong leadership. Although the roles and responsibilities for Chairman and Managing Director are vested in Dr Gan See Khem, all major decisions are made in consultation with the Board, ARMC, NC and RC.

Ms Chin Wei Jia, the Group CEO, assisted by the management team, is responsible for the overall management and operation of the Group and the development of the Group’s healthcare and education businesses in Singapore and the region. Ms Chin Wei Jia makes strategic proposals to the Board and after robust and constructive board discussions, executes the agreed strategies, manages and implement the Board’s decisions.

During the financial year ended 30 June 2016, Independent Non-Executive Directors represent half of the Board while the ARMC, NC and RC are entirely made up of Independent Non-Executive Directors. Therefore, the Board believes that there are adequate safeguards in place against having an uneven concentration of power and authority in a single individual.

Lead Independent DirectorMr Gan Lai Chiang, Andy was the Lead Independent Director of the Company until his resignation as Director on 1 March 2016.

The Board appointed Dr Cheah Way Mun as the Lead Independent Director on 1 March 2016 and subsequently re-designated the role of Lead Independent Director to Professor Annie Koh on 1 September 2016 to lead and co-ordinate activities of the Independent Non-Executive Directors of the Company.

The Lead Independent Director is the principal liaison on Board issues between the Independent Non-Executive Directors and the Executive Chairman and Executive Directors. The Lead Independent Director is also responsible to spearhead the meeting among Independent Non-Executive Directors without the presence of management and other Directors, if required, on a need-be basis, and provide feedback from the Independent Non-Executive Directors to the Executive Chairman and Managing Director. The Lead Independent Director also aids the Independent Non-Executive Directors to constructively challenge and help develop strategic proposals for the Group.

In situations where shareholders may have concerns or issues and such communication with the Executive Chairman and Managing Director or the Executive Directors have failed to resolve the matter, shareholders should feel free to approach any Independent Non-Executive Director of the Company to raise their concerns or issues directly.

BOARD MEMBERSHIPPrinciple 4

Nominating CommitteeThe NC meets regularly and as warranted to carry out the duties and responsibilities in accordance with the terms of reference. The primary duties of the NC are to make recommendations to the Board on all Board appointments, review the effectiveness of the Board and the Board Committees as a whole, and the contribution and independence of individual Directors.

The NC comprises three members, all of whom are Independent Non-Executive Directors:

Professor Tan Chin Tiong Chairman (Independent Non-Executive Director)Professor Annie Koh Member (Lead Independent Director)Dr Cheah Way Mun Member (Independent Non-Executive Director)

The NC is guided by written terms of reference which clearly sets out its authority and duties. The key roles of the NC includes:

1) Review and make recommendations to the Board on all candidates nominated (whether by the Board or the shareholders) for appointment to the Board and on re-nomination of retiring Directors for re-election, taking into account the composition and progressive renewal of the Board and each Director’s competencies, commitments, contributions and performance;


Annual Report 2016

29

2) Make recommendations to the Board on matters relating to Board succession plans, the development of a process for evaluating the performance of the Board, Board Committees and Directors and training programmes for the Board;

3) Decide on procedures for evaluating the performance of the Board and Board Committees and propose objective performance criteria;

4) Review the effectiveness of the Board and Board Committees as a whole and contributions of each Director;

5) Decide, when a Director has multiple board representations, whether the Director is able to and has been adequately carrying out his or her duties as Director of the Company; and

6) Review the independence of Non-Executive Directors pursuant to the Code.

Each member of the NC shall abstain from voting on and making any recommendations and/or participating in any deliberations of the NC in respect of any matter in which he or she may be directly or indirectly interested.

Directors’ Time CommitmentsThe NC also considers whether Directors, who have multiple board representations, are able to and have been devoting sufficient time and attention to discharge their responsibilities adequately. The NC is satisfied that notwithstanding the multiple board representations, all Directors of the Company including former Director, Mr Gan Lai Chiang, Andy, have discharged their duties adequately for the financial year ended 30 June 2016.

The Company does not face competing time commitment issue as the dates for all Board and Board Committee meetings are planned and agreed in advance by all Directors of the Company.

None of the Directors holds more than five directorships in public listed companies, the maximum number determined by the Company. The following is the list of present and past directorships held over the preceding three years in other public listed companies by each current Director of the Company up to 30 June 2016:

NamePresent chairmanships and directorships in other listed companies

Chairmanships and directorships held over the preceding three

(3) years in other listed companiesDr Gan See Khem Health Management International Limited –Ms Chin Wei Jia Health Management International Limited –Mr Chin Wei Yao Health Management International Limited –Dr Cheah Way Mun Health Management International Limited –Professor Annie Koh Health Management International Limited

K1 Ventures Limited–

Professor Tan Chin Tiong Health Management International Limited Imperium Crown LtdMYP Ltd

–

Process and Criteria Used for Appointment of New DirectorsIn appointing a new Director, the NC first considers the range of skills and experience required in the light of the:1) Geographical spread and diversity of the Group’s businesses;2) Strategic direction and progress of the Group;3) Current composition of the Board; and4) Independence requirements.

After which, the NC will source for potential candidates, usually through recommendations from Directors and Management of the Company. However, external search from recruiting firms may also be sought if necessary.

Next, the NC will conduct interviews and assess the suitability of the candidates. The key criteria used to select new appointments include possession of expert knowledge that meets the needs of the Group, ability to commit time, personal character, business experience and acumen. Where a Director has multiple board representations, the NC will evaluate whether he or she will be able to adequately carry out his or her duties as a Director of the Company. Final approval on the appointment of a candidate is determined by the Board of the Company.



30

During the financial year ended 30 June 2016, the Board appointed Mr Chin Wei Yao as an Executive Director of the Company on 23 October 2015. The Board also appointed Professor Annie Koh as an Independent Non-Executive Director of the Company, in place of Mr Gan Lai Chiang, Andy, on 1 March 2016. The Board and the NC are satisfied with the qualification, experience and suitability of Mr Chin Wei Yao and Professor Annie Koh after taking into account their extensive working experiences and their qualifications prior to the joining of the Group, and accordingly, the appointments of Mr Chin Wei Yao and Professor Annie Koh have been approved by the Board as a whole.

The NC is also responsible for the nomination of retiring Directors for re-election at the Annual General Meeting (“AGM”). For this purpose, the NC reviews each retiring Director’s contributions and assess the performance of the retiring Director for the relevant financial year. Each member of the NC shall abstain from voting on any resolutions in respect to his or her nomination for re-election.

Article 95 of the Company’s Constitution requires one-third of the Directors for time being, other than the Managing Director, to retire and being eligible, to subject themselves for re-election by shareholders at every AGM. Article 96 of the Company’s Constitution requires any Director appointed by the Directors of the Company to retire from office at the next AGM and being eligible, to subject himself or herself for re-election by shareholders of the Company.

The Directors standing for retirement and being eligible, for re-election at the forthcoming AGM are Mr Chin Wei Yao, Professor Annie Koh and Professor Tan Chin Tiong. The NC has considered the performance of retiring Directors and accordingly, recommended the nomination of the three retiring Directors to the Board. Accordingly, the Board has accepted the recommendation of the NC and put forward the nomination of the retiring Directors, namely Mr Chin Wei Yao, Professor Annie Koh and Professor Tan Chin Tiong, for re-election as Directors at the forthcoming AGM of the Company.

Mr Chin Wei Yao will, upon re-election as a Director of the Company, remain as an Executive Director of the Company. He is also the Group CFO of the Company. Mr Chin Wei Yao is the son of Dr Gan See Khem, the controlling shareholder, Executive Chairman and Managing Director of the Company, and Dr Chin Koy Nam, the controlling shareholder of the Company, and the brother of Ms Chin Wei Jia, Executive Director and Group CEO of the Company. Mr Chin Wei Yao has a direct interest in 2,147,600 ordinary shares, representing less than 10% in the capital of the Company. Mr Chin Wei Yao has no indirect interest in the ordinary shares of the Company.

Professor Annie Koh will, upon re-election as a Director of the Company, remain as the Chairman of the ARMC and as a member of the NC and RC. There is no relationship (including immediate family relationships) between Professor Annie Koh and the other Directors of the Company or the Company’s 10% shareholders. Professor Annie Koh has no direct or indirect interest in the ordinary shares of the Company.

Professor Tan Chin Tiong will, upon re-election as a Director of the Company, remain as the Chairman of the NC and RC and as a member of the ARMC. There is no relationship (including immediate family relationships) between Professor Tan Chin Tiong and the other Directors of the Company or the Company’s 10% shareholders. Professor Tan Chin Tiong has direct interest in 2,285,627 ordinary shares, representing less than 10% in the capital of the Company. Professor Tan Chin Tiong has no indirect interest in the ordinary shares of the Company.

Pursuant to the Code, the Board shall generally avoid approving the appointment of an Alternate Director unless the Director has a medical emergency or any other reasons that the Board shall determine as valid. Prior to recommending such appointment to the Board for approval, the NC shall appraise the proposed Alternate Director to assess his/her familiarity with the Company’s affairs and whether he/she qualifies as an Independent Director if he/she is to be appointed as an Alternate Director to an Independent Director. Such appointment shall only be for a limited period and the Alternate Director shall assume all the duties and responsibilities of the Director. During the financial year ended 30 June 2016, no Alternate Director was appointed or proposed to be appointed by any Director of the Company.

BOARD PERFORMANCEPrinciple 5

Evaluation ProcessesThe NC believes that evaluating the performance and effectiveness of the Board and Board Committees is essential for good corporate governance of the Company.


Annual Report 2016

31

The NC has implemented formal processes for assessing the Board and Board Committees as a whole. Factors including but not limited to (1) structure and size of the Board and Board Committees, (2) the manner in which the Board and Board Committees meetings are conducted, (3) Board and Board Committees accountability, (4) degree of corporate strategy and planning, (5) risk management and internal controls review processes are taken into consideration to evaluate the Board’s and Board Committees’ performance.

The NC also has in place a formal process for assessment of the contributions by each Director and the effectiveness of the Board and Board Committees. The NC reviews the assessment result of each Director’s performance and reviews the Board’s and Board Committees’ performance and effectiveness as a whole annually using objective and appropriate quantitative and qualitative criteria, such as those factors above recommended by the NC. In reviewing the overall Board’s performance, the NC also took into consideration the Board’s ability to monitor the Management’s achievement of the strategic directions/objectives set and approved by the Board.

Assessment parameters for Directors’ performance include their level of participation at Board and Board committee meetings and the quality of their contributions to Board processes and the business strategies and performance of the Group. Using results from the assessment exercise, the Board then takes the opportunity to explore areas of improvement so that necessary steps can be executed to improve the performance of the Board and Board Committees.

The evaluation of effectiveness and performance of the Board and Board Committee as a whole is carried out on a self-evaluation basis by each member of the Board, while the performance of an individual Director is evaluated by all Directors except for the Director that is subject to assessment. No external facilitator has been engaged by the Company for the purpose of performance and effectiveness evaluation for the financial year ended 30 June 2016.

ACCESS TO INFORMATIONPrinciple 6

Complete, Adequate and Timely InformationThe Management recognises that the flow of accurate and timely information to the Board is fundamental to the Board’s effectiveness and efficiency in discharging its duties.

Prior to each Board and Board Committee meeting, the Management provides the Board with information relevant to matters on the agenda for the Board and Board Committee meetings. The papers generally include sufficient information from Management on financial, business and corporate issues to support the Directors in making informed decisions on the matters and issues considered at the Board and Board Committee meetings. Management and staff who have prepared the papers, or who can provide additional insights into the matters to be discussed, are invited to attend the Board and Board Committee meetings. The Directors of the Company also receive information from the Management about the Group on a regular and timely manner. The Directors of the Company are also entitled to request from Management any additional information as may be needed to make informed decisions.

The Directors have the right to seek independent legal and other professional advice, at the Company’s expense, concerning any aspect of the operations or undertakings of the Group in furtherance of their duties and responsibilities.

Company SecretaryThe Directors of the Company have unrestricted access to the Company’s records and information, and independent access to the Company’s Management and the Company Secretary.

The appointment and the removal of Company Secretary is subject to the approval of the Board as a whole in accordance with the Constitution of the Company. On 1 September 2016, the Board approved the appointment of Ms Noraini Binte Noor Mohamed Abdul Latiff as the Company Secretary of the Company, in place of Mr Lo Kim Seng.

During the financial year ended 30 June 2016, the Company Secretary or his/her representatives attend all Board and Board Committee meetings and is responsible for ensuring that Board procedures are observed and that the Constitution of the Company, the Companies Act, Chapter 50 and the Listing Manual of the SGX-ST, are complied with.



32

PROCEDURES FOR DEVELOPING REMUNERATION POLICIESPrinciple 7

LEVEL AND MIX OF REMUNERATIONPrinciple 8

DISCLOSURE ON REMUNERATIONPrinciple 9

Remuneration CommitteeThe RC meets regularly and as warranted to carry out the duties and responsibilities in accordance with the terms of reference. The RC generally recommends the general framework of remuneration for the Directors of the Company and Key Management Personnel of the Group and reviews the appropriateness, transparency and accountability to shareholders on the remuneration issues of the Directors and Key Management Personnel in the Company.

The RC comprises three members, all of whom are Independent Non-Executive Directors:

Professor Tan Chin Tiong Chairman (Independent Non-Executive Director)Professor Annie Koh Member (Lead Independent Director) Dr Cheah Way Mun Member (Independent Non-Executive Director)

The primary objective of the general remuneration framework is to provide remuneration packages in tandem with market rate, which would attract, retain and motivate the Directors of the Company and the Key Management Personnel of the Group.

The RC is guided by written terms of reference which clearly sets out its authority and duties. The key roles of the RC includes:

1) Recommend to the Board a framework of remuneration for the Board members and Key Management Personnel of the Group;

2) Decide on the appropriate level of remuneration to attract, retain and motivate the Directors and Key Management Personnel;

3) Consider whether Directors should be eligible for benefits under any long-term incentive schemes; and

4) Review terms, conditions and remuneration of the Key Management Personnel of the Group.

The recommendations of the RC are submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to Directors’ fees, base or fixed salary, variable or performance related incomes or bonus, share options, share-based rewards and benefits-in-kind are reviewed by the RC.

Each member of the RC shall abstain from voting on and making any recommendations and/or participating in any deliberations of the RC in respect of his or her remuneration package.

The RC has full authority to engage any external professional advice relating to remuneration matters as and when the need arises. During the financial year ended 30 June 2016, the Company with the recommendation of the RC had engaged Mercer (Singapore) Pte Ltd (“Mercer”), a global human resource consulting firm to perform a benchmarking assessment to assess competitiveness of the Group’s remuneration against the market, and to propose an incentive plan comprising short term and long term incentives for the attraction and retention of C-suite and key personnel within the Group. In addition, they were also engaged to develop a leadership success profile with key competencies so as to facilitate the Group’s leadership succession planning exercise and enable the Group to identify and develop candidates who are able to assume C-suite positions within the Group. Mercer is an external professional firm with no relationship with the Company and hence, its independence and objectivity in the engagement has been maintained.

Directors’ RemunerationIn structuring and reviewing the Directors’ remuneration packages, the RC seeks to align interests of Directors with those of the shareholders and link rewards to corporate and individual performances as well as the roles and responsibilities of each Executive Director.


Annual Report 2016

33

The RC also ensures that the Independent Non-Executive Directors should not be overcompensated to the extent that their independence may be compromised.

The Directors’ fees for the Non-Executive Directors of the Company consists of a basic fee and additional fees, where applicable, for their participation in Board Committees of the Company. The additional fees are set in accordance with a remuneration framework by taking into account the effort, time spent and responsibilities of individual Non-Executive Director of the Company.

No individual Non-Executive Director is allowed to fix his or her remuneration. The payment of Directors’ fees for Non-Executive Directors are submitted to shareholders for approval at each AGM.

The Board, having considered several factors, including the confidentiality and commercial sensitivity attached to the remuneration matters and in the interest of the Company, decided that the remuneration of each Director and former Director of the Company should be disclosed on a band-wide manner.

The total remuneration of the Directors and former Director of the Company received from the Group for the financial year ended 30 June 2016 in bands of SGD250,000 is set out below:

DirectorsBase/Fixed

salary

Variable or performance-

related income/ bonuses

Share options/

share-based awards

Benefits in kind

Directors’ fee Total

SGD1,500,000 to SGD1,750,000Dr Gan See Khem 50% 12% 33% 2% 3% 100%SGD1,000,000 to below SGD1,250,000Ms Chin Wei Jia(1) 37% 9% 48% 5% 1% 100%SGD250,000 to below SGD500,000Mr Chin Wei Yao(2) 86% 5% 0% 4% 5% 100%Below SGD250,000Dr Cheah Way Mun 0% 0% 0% 0% 100% 100%Mr Gan Lai Chiang, Andy(3) 0% 0% 0% 3% 97% 100%Professor Annie Koh(4) 0% 0% 0% 0% 100% 100%Professor Tan Chin Tiong 0% 0% 0% 2% 98% 100%

Note:(1) Ms Chin Wei Jia was appointed as Group CEO of the Company with effect from 30 September 2015.(2) Mr Chin Wei Yao was appointed as an Executive Director of the Company with effect from 23 October 2015. Mr Chin Wei Yao was also the

Director, Finance & Corporate Development of the Company. The total remuneration information covers the full financial year from 1 July 2015 to 30 June 2016.

(3) Mr Gan Lai Chiang, Andy, ceased as an Independent Non-Executive Director of the Company with effect from 1 March 2016.(4) Professor Annie Koh was appointed as an Independent Non-Executive Director of the Company with effect from 1 March 2016.

The Board and the RC are satisfied that the Group’s prescribed performance targets set for Dr Gan See Khem, Dr Chin Koy Nam and Ms Chin Wei Jia under the HMI Performance Share Plan have been achieved subsequent to the financial year ended 30 June 2016 and accordingly, the Company allotted and issued an aggregate of 8,820,000 new ordinary shares in the capital of the Company pursuant to the vesting of the awards in late August 2016. The awards were granted to the participants pursuant to the HMI Performance Share Plan in November 2014.

Remuneration of Top Five Key Management PersonnelHaving considered several factors, the Group is of the view that in order to maintain confidentiality and commercial sensitivity of the remuneration matters and avoid staff poaching within the healthcare industry, the remuneration of top five Key Management Personnel will be disclosed on a band-wide manner, without further disclosing the full name of the Key Management Personnel and the detailed breakdown of their remuneration package. The remuneration paid to the top five Key Management Personnel of the Group (who are not Directors of the Company) for financial year ended 30 June 2016 is set out below:-

Remuneration Band Number of Key Management PersonnelBand A: SGD250,000 to below SGD500,000 1

Band B: Below SGD250,000 4



34

The total remuneration paid to the top five Key Management Personnel of the Group (who are not Directors of the Company) for financial year ended 30 June 2016 is SGD1,243,000.

Remuneration of Employees related to DirectorsDuring the financial period commencing from 1 July 2015 to the date preceding to the appointment of Mr Chin Wei Yao as Executive Director of the Company on 23 October 2015, Mr Chin Wei Yao was holding the position of Director, Finance & Corporate Development of the Company. He is the son of Dr Gan See Khem, Executive Chairman and Managing Director of the Company, and the brother of Ms Chin Wei Jia, Group CEO and Executive Director of the Company.

As at 30 June 2016, the Company has one employee, Dr Chin Koy Nam, who is the spouse of Dr Gan See Khem and father of Ms Chin Wei Jia and Mr Chin Wei Yao. Dr Chin serves the Company as the Group Medical Director and is responsible for the oversight of the Group’s overall medical and related matters.

The remuneration packages for both Mr Chin Wei Yao and Dr Chin Koy Nam are consistent with the basis of determining the remuneration of the other unrelated employees. The remuneration paid to Mr Chin Wei Yao preceding to the date of his appointment as Executive Director of the Company on 23 October 2015 exceeded SGD50,000 and the total remuneration thereof has been disclosed on the above table. The remuneration paid to Dr Chin Koy Nam for the financial year ended 30 June 2016 is set out below:

NameBase/Fixed

salary

Variable or performance-

related income/ bonuses

Share options/

share-based awards

Benefits in kind

Directors’ fee (1) Total

SGD400,000 to below SGD450,000Dr Chin Koy Nam 29% 5% 62% 2% 2% 100%

Note:(1) Directors’ fee is payable to Dr Chin Koy Nam in his capacity as a Director of a subsidiary.

Save for the above, none of the employees of the Company and its subsidiaries was an immediate family member of any Director of the Company and whose remuneration exceeded SGD50,000 during the financial year ended 30 June 2016.

Remuneration MixThe Company’s remuneration framework is made up of two key components, namely fixed pay and variable incentives. Fixed pay comprises a base salary and annual wage supplement. The variable incentives can be further broken down into short-term incentives and long-term incentives.

The short-term incentive takes the form of an annual variable bonus. The RC reviews and approves annual variable bonus to the Executive Chairman and Executive Directors of the Company, based on individual performance and contributions towards the Company and the Group.

Two share-based incentive schemes are also in place to reward, motivate and retain Key Management Personnel, namely the HMI Employee Share Option Scheme and the HMI Performance Share Plan. Key information regarding the HMI Employee Share Option Scheme and the HMI Performance Share Plan is set out on pages 44 and 45 of the Annual Report.

Even though there are no contractual provisions to allow the Company to reclaim incentive components of remuneration from Executive Directors or Key Management Personnel in exceptional circumstances of misstatement of financial results or of misconduct resulting in financial loss to the Group, the Company and/or its subsidiaries will not hesitate to take legal actions against the personnel responsible for and involved in such exceptional circumstances.

ACCOUNTABILITYPrinciple 10

The Board is accountable to shareholders and the Management is accountable to the Board for the Group’s financial and operational position. The Company recognises that timely and effective communication will enhance transparency and accountability to its shareholders.


Annual Report 2016

35

The Board is committed to providing shareholders with a balanced and comprehensive assessment of the Group’s financial performance, position, and prospects, including quarterly financial statements reporting and other price-sensitive reports, and reports as required by regulatory bodies. The Company communicates the Group’s material price-sensitive information announcements to its shareholders via SGXNET and via the Company’s corporate website. Material price-sensitive information is publicly released on a timely manner as required under the Listing Manual of the SGX-ST.

The Board has taken steps in compliance with rules and regulations as well as listing rules introduced by SGX-ST. The Board has made reference to Rule 705(5) of the Listing Manual of the SGX-ST and adopted a written policy by providing negative assurance statement in respect of the quarterly financial statements and half-year financial statements to the shareholders of the Company.

RISK MANAGEMENT AND INTERNAL CONTROLSPrinciple 11

The Board acknowledges their full responsibility of the overall internal controls system and risk management established by the Group. However, they also recognise that no internal controls system and risk management system will preclude all material errors and irregularities as the Group’s internal controls system and risk management system is designed to manage rather than eliminate the risk of failure to achieve business objectives. The system provides reasonable, but not absolute assurance that the Group will not be adversely affected by any event that can be reasonably foreseen. However, the Board also notes that no system of internal controls and risk management can provide absolute assurance in this regard or absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, losses, fraud or other irregularities.

The ARMC has facilitated the Board in discharging the function of reviewing the Group’s risk management policy and strategy. By identifying areas of significant business risks, including revenue loss, property loss and breach of information security, the Management, under the guidance of ARMC, implements appropriate measures to control and mitigate these risks. In determining the appropriate measures, the cost of control and risk management, and the impact of risks occurring will be assessed against the benefits of reducing the risks.

During the financial year ended 30 June 2016, the Group put in place the HMI Enterprise Risk Management Framework (the “Framework”) outlining the Group’s internal control and risk management processes and procedures. The Framework has been tailored to meet the risk management requirements and support the achievement of the Group’s objectives. It is designed to identify potential key events that may affect the Group and manage risks within its risk appetite, and ultimately provide assurance to its stakeholders regarding the achievement of its objectives.

The risk governance principles embedded in the Framework comprises of four Lines of Defence, which is a prerequisite to ensuring a robust system of risk management and effective internal controls within the Group. Under the first Line of Defence, Management is required to ensure good corporate governance through identifying risks, maintaining internal controls and executing risk and control procedures on a day-to-day basis. Such policies and procedures relevant to Group’s business environment would govern financial, operational, information technology and regulatory compliance matters and are reviewed and updated periodically.

Under the second Line of Defence, the effectiveness of implementation of the first Line of Defence is being monitored by the Group’s Risk Management function. The Group’s Risk Management function will guide and coordinate risk management and compliance across the Group.

Under the third Line of Defence, to obtain assurance on the adequacy and effectiveness of internal controls, the significant business units are required to provide the Company with written assurances on the adequacy and effectiveness of their system of internal controls and risk management. The Board has received written assurance from the Executive Chairman and Managing Director, the Group CEO, the Group CFO, the CEOs and Chief Financial Officers of the hospitals, that the financial records have been properly maintained and the financial statements provide a true and fair view of the Group’s operations and finances; and the Group’s risk management and internal control systems are operating effectively for the financial year ended 30 June 2016.

The ARMC has also met with the internal and external auditors to review the internal and external auditors’ audit plans and the adequacy of risk management mechanisms implemented within the Group. As part of the annual statutory audit on financial statements, the internal and external auditors also report to the ARMC and the appropriate level of Management on any material weaknesses in financial internal controls over the areas which are significant.



36

Under the fourth Line of Defence, the Board, together with the ARMC, reviews the effectiveness and adequacy of the Group’s internal controls, including financial, operational, compliance and information technology controls and risks management of the Group on annual basis. The review is based on the internal controls established and maintained by the Group, reports submitted by the external auditor and the internal auditor and regular reviews performed by Management. The Board, with the concurrence of the ARMC, is of the opinion that, at the Company and Group level, there were adequate and effective risk management and internal control systems, covering financial, operational, compliance and information technology controls as at 30 June 2016.

AUDIT COMMITTEEPrinciple 12

The ARMC is guided by written terms of reference which clearly sets out its authority and duties. The ARMC meets regularly and as warranted to carry out its duties and responsibilities.

The ARMC comprises three members, all of whom are Independent Non-Executive Directors:

Professor Annie Koh Chairman (Lead Independent Director)Professor Tan Chin Tiong Member (Independent Non-Executive Director)Dr Cheah Way Mun Member (Independent Non-Executive Director)

None of the members nor the Chairman of the ARMC is a partner or director of the Group’s audit firms or former partner or former director of the Group’s audit firms. None of them has any financial interest in the Group’s audit firms.

The Board is of the view that at least two members of the ARMC have relevant accounting or related financial management expertise and experience to discharge their functions within the terms of reference.

Duties of the ARMCThe primary duties of the ARMC are to assist the Board to discharge the responsibility for reviewing the Group’s financial reporting, budgeting and auditing processes, monitoring the changes in the Group’s accounting policies, reviewing the Group’s internal controls including financial, operational, compliance and information technology controls and risk management system and assessing the accounting implications of major transactions of the Group.

During the financial year ended 30 June 2016, the ARMC discharged the following delegated functions in accordance with the terms of reference adopted by the ARMC:

1) Reviewed the adequacy and the effectiveness of the Group’s internal controls including financial, operational, compliance and information technology controls and risk management system after the reporting from the internal auditor and external auditor;

2) Reviewed the consolidated financial statements of the Group with external auditor before submission to the Board for adoption;

3) Reviewed interested person transactions as defined in Chapter 9 of the Listing Manual of the SGX-ST to ensure that they are on normal commercial terms and not prejudicial to the interest of the Company and its minority shareholders;

4) Reviewed the scope of work of the external auditor and the results arising therefrom;

5) Reviewed the independence and objectivity of the external auditor, their re-appointment, and their audit fee;

6) Reviewed the audit plans of the external auditor and any recommendations on internal controls arising from the statutory audit;

7) Reviewed the appointment of the internal auditor, the scope of internal audit and the internal audit fees;

8) Reviewed the internal control weaknesses and the recommendations arising from the internal audit;


Annual Report 2016

37

9) Reviewed the adequacy and effectiveness of the internal audit function of the Group;

10) Reviewed the quarterly, half year and full year financial statements and reports that are submitted to the Board for approval;

11) Reviewed fraud, irregularity or infringement of any laws of the countries that the Group operates in, rule and regulations the ARMC is aware of, which has or is likely to have a material impact on the Group’s operation and financial position, and the findings of any internal investigations and Management’s response thereto; and

12) Considered other matters as requested by the Board.

Each member of the ARMC shall abstain from voting on and making any recommendations and/or participating in any deliberations of the ARMC in respect of any matter directly or indirectly he or she may be interested.

The ARMC meets periodically with internal auditor, external auditor and the Management to review accounting policies, audit processes, financial statements and such other related matters so as to ensure that the ARMC is comfortable with the Group’s control environment.

The ARMC met the internal auditor and the external auditor, in each case, without the presence of the Management, at least once during the financial year ended 30 June 2016.

The ARMC has reviewed the independence and objectivity of the external auditor of the Company, Messrs PricewaterhouseCoopers LLP, an audit firm registered with the Accounting & Corporate Regulatory Authority through discussions as well as the review of the volume and nature of non-audit services, if any, provided by the external auditor during the financial year ended 30 June 2016.

Based on the information available to the ARMC, the ARMC assessed Messrs PricewaterhouseCoopers LLP, based on factors such as performance, adequacy of resources and experience of their audit engagement partners and audit team assigned to the Group’s audit, as well as the size and complexity of the Group. The ARMC is satisfied that the financial, professional and business relationships between the Group and the external auditor do not prejudice their independence and objectivity. Accordingly, the ARMC is satisfied that Rule 712 and Rule 715 of the Listing Manual of the SGX-ST have been complied with and has recommended to the Board the re-appointment of Messrs PricewaterhouseCoopers LLP as the external auditor at the forthcoming AGM.

The ARMC has undertaken a review of the non-audit services provided by Messrs PricewaterhouseCoopers LLP, the external auditor for the financial year ended 30 June 2016 and is satisfied that such services have not significantly and will not, in the ARMC’s opinion, affect the independence of the external auditor. The amount of audit and non-audit fees paid or payable to the external auditor, Messrs PricewaterhouseCoopers LLP and other auditor in respect of the financial year ended 30 June 2016 are as set out in page 64 of this Annual Report.

The ARMC is kept abreast with regular updates on the changes to accounting standards, rules and regulations to ensure that they are well-informed and competent in carrying out their roles and responsibilities.

In accordance with the principles and best practices as set out in the Code, the ARMC has:

1) Full access to and co-operation from the Management as well as full discretion to invite any Director or Key Management Personnel to attend meetings; and

2) Been given reasonable resources to enable it to discharge its function properly.

Whistle-Blowing PolicyThe Company has established a whistle-blowing policy within the Group to encourage the reporting in good faith of suspected improprieties or misconducts. The policy stipulates clearly defined processes through which the reports may be made by the employees of the Group, with the assurance that any employee and other persons making such a report will be treated fairly and, to the extent possible, protected from reprisal. The ARMC is satisfied that arrangements are in place for independent investigation of such matters and for appropriate follow-up action. To facilitate the management of such incidences of alleged improprieties or misconducts, the ARMC is guided by a set of guidelines to ensure proper conduct of investigations and appropriate closure actions following completion of investigations, including administrative, disciplinary, civil and/or criminal actions, and remediation of control weaknesses that perpetrated the improprieties and misconduct so as to prevent a recurrence.



38

In addition, the ARMC reviews the policy periodically to ensure that it remains current. To the best knowledge of the Board and the ARMC, there were no whistle-blowing reports received through the Group’s whistle-blowing mechanism during financial year ended 30 June 2016.

INTERNAL AUDITPrinciple 13

During the financial year ended 30 June 2016, the Company outsourced its internal audit function to a reputable audit firm, Messrs Ernst & Young Malaysia LLP, after obtaining the approval of the ARMC. The objective of outsourced internal audit function is to assist the ARMC and the Directors of the Company to evaluate the adequacy and effectiveness of the Group’s internal controls including financial, operational, compliance and information technology controls and risk management system annually by performing independent reviews on the Group’s internal processes and procedures over the Group’s operations.

The internal auditor, Messrs Ernst & Young Malaysia LLP, consists of experienced personnel with relevant qualification and experience, have unfettered access to all the Group’s documents, records, properties and personnel during the course of internal audit. Based on information available to the ARMC, the ARMC is satisfied that Messrs Ernst & Young Malaysia LLP is a reputable audit firm and is adequately resourced. The internal auditor has carried out its function in general conformance with the applicable International Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors Incorporated, USA.

The significant internal control weaknesses identified during the course of internal audit together with the recommendations thereof are reported to the ARMC on a timely basis. The follow up review on the implementation of recommendations are also monitored closely by both the Management and the internal auditor of the Group on a regular basis.

The ARMC will approve the hiring, the removal, the evaluation and the compensation of internal audit function, in addition to the annual review of the adequacy and effectiveness of the internal audit function of the Group.

SHAREHOLDER RIGHTSPrinciple 14

The Company is committed to treat all shareholders fairly and equitably by recognising and facilitating the exercise of shareholders’ rights, and continually updating the shareholders of the Company on the Group’s affairs. The Company strives to facilitate the exercise of ownership rights by all shareholders and to keep them sufficiently informed of changes in the Group and/or its businesses which are likely to materially affect the price or value of the Company’s shares.

The Company also ensures that its shareholders have the opportunity to participate effectively in and vote at the general meetings by providing essential information relating to the proposed resolutions tabled at the general meeting and the voting procedures that govern general meetings.

COMMUNICATION WITH SHAREHOLDERSPrinciple 15

Proactive Engagement with ShareholdersThe Company is committed to engaging and strengthening stakeholder relationships through its investor relations team by engaging in timely communication with its shareholders, investors, analysts, fund managers, bankers, stakeholders, the media and the public. In addition to general meetings, the senior management meets regularly with investors, analysts and the media, as well as participates in various public forums. In the financial year ended 30 June 2016, the Company started hosting meetings and participating in non-deal roadshows with analysts and investors. Such meetings provide useful platforms for senior management to engage with investors and analysts on a regular basis.


Annual Report 2016

39

Disclosure of Material Price-Sensitive Information on a Timely BasisThe Company adopts the practice of disclosing material price-sensitive information in a timely, fair and transparent manner to its shareholders. All material price-sensitive information is primarily disclosed in a comprehensive, accurate and timely basis to SGX-ST via SGXNET. The release of such information is pivotal to good corporate governance and enables shareholders to make informed decisions with respect to their investments in the Company.

Furthermore, the Company communicates to all stakeholders through various methods:

1) Annual reports are prepared and issued to all shareholders. The Board makes every effort to ensure that the annual reports includes the essential information about the Group, future developments and other disclosures required by the Companies Act, Chapter 50 and Singapore Financial Reporting Standards;

2) Quarterly, half year and full year financial statements containing a summary of financial information and affairs of the Group for the financial period under review;

3) Notices of the explanatory memoranda for AGMs and Extraordinary General Meetings (“EGMs”);

4) Disclosures to the SGX-ST;

5) Corporate website at http://hmi.com.sg where shareholders can access information on the Group; and

6) Quarterly and full year presentation slides containing the material financial results/analysis and developments of the Group.

The notice of each AGM or EGM is despatched to the shareholders of the Company within requisite period together with explanatory notes or additional information relating to resolutions. The notice of each AGM or EGM is also advertised in a major newspaper and made available on SGXNET.

Steps taken to Solicit and Understand the Views of ShareholdersDuring the financial year ended 30 June 2016, the Company has engaged in proactive and timely communication with its shareholders, investors, analysts, fund managers, bankers, stakeholders, the media and the public by addressing their queries in email or phone as well as soliciting and understanding their views or concerns on the Group at various occasions other than at the AGMs or EGMs.

Corporate WebsiteThe corporate website, which is available at http://hmi.com.sg, prominently features the latest and the past financial results and related information of the Group. The contact details of the investor relations team are available on the corporate website to enable the shareholders of the Company to contact the Company easily.

The corporate website provides, inter alia, announcements, annual reports, presentation slides, and information about the Group. To ensure fair and equal dissemination to the shareholders of the Company, the Group’s financial statements are also posted on the corporate website following the release to the SGX-ST via SGXNET.

Dividend PolicyThe Company does not have a fixed dividend policy. The frequency and amount of dividends that the Directors of the Company may recommend or declare in respect of any particular financial year or period will depend on the Group’s level of earnings, financial results of operations, capital expenditure requirements, investment plans, cash flow, general financial and general business conditions and such other factors as the Directors of the Company may deem appropriate.

The Board has recommended a final one-tier tax-exempt cash dividend of RM 0.75 cents per ordinary share for the financial year ended 30 June 2016 for shareholders’ approval at the forthcoming annual general meeting of the Company scheduled for 24 October 2016. Payment of the final one-tier tax-exempt cash dividend, upon receipt of shareholders’ approval, will be paid to the eligible shareholders in an equitable manner on 11 November 2016. The full details are set out in page 89 of this Annual Report.



40

CONDUCT OF SHAREHOLDER MEETINGSPrinciple 16

The Company is in full support of Principle 16 to encourage shareholders’ participation at the general meetings of the Company. The shareholders are encouraged to attend the AGM or EGM to ensure a high level of accountability and to stay informed of the Group’s strategy and goals. The AGM or EGM is the principal forum for dialogue with the shareholders of the Company.

The Constitution of the Company allows a shareholder entitled to attend and vote at the general meetings to appoint not more than two proxies to attend and vote in his or her stead. A shareholder who is a relevant intermediary defined under the Companies Act, Chapter 50, may appoint more than two proxies to attend and vote at the general meetings of the Company. The Company also accept absentia voting method, pursuant to which the proxies are allowed to vote in his or her discretion or in accordance with shareholders’ instructions at the general meetings of the Company.

Together with Executive Directors, the Chairman of ARMC, RC and NC are required to be present at the general meetings of the Company to address shareholders’ questions. The external auditor of the Company will also be present to assist the Directors of the Company in addressing shareholders’ queries on the conduct of the audit and the preparation and content of their auditors’ report.

To facilitate an informative session, the shareholders of the Company are also invited to raise issues either formally or informally before or at the general meetings. At the AGM or EGM, each substantial distinct issue is tabled as a separate resolution for approval by shareholders of the Company.

The Company has established the system of voting in accordance with the Constitution of the Company at the general meetings, in which each resolution put forth is voted by way of poll by the shareholders of the Company. The results of each resolution is presented at the general meetings and announced subsequently to SGX-ST via SGXNET.

The Company Secretary or representative will prepare the minutes of the general meetings to record the proceedings of general meeting, of which essentially contain the salient questions and answers exchanged between the shareholders and the Board and Management. The minutes of the general meetings will be made available to the shareholders of the Company upon request.

ADDITIONAL INFORMATION

Dealing in SecuritiesThe Group has adopted internal codes pursuant to Rule 1207(19)(c) of the SGX-ST Listing Manual that applicable to the Company and its officers in relation to the dealing in the Company’s securities. The Company and its officers are prohibited to deal in the Company’s securities on short term considerations and during the period commencing two weeks before the announcement of the Group’s financial statements for each of the first three quarters of its financial year and one month before the announcement of the Company’s full year financial statements. The prohibition ends on the release of the announcement of the Company’s financial statements.

The Company and its officers are also prohibited to deal in the Company’s securities whenever they are in possession of unpublished, price-sensitive information that is not generally available to the public.

Interested Person TransactionsThe Company does not have interested person transactions general mandate from shareholders of the Company. However, the Group has adopted internal policies, involving review and approval procedures for any interested person transactions entered into by the Group.

For the financial year ended 30 June 2016, there was no interested person transactions entered into by the Company or its subsidiaries with any of its interested persons, that when aggregated, exceeded SGD100,000.

Material ContractsSave for those material contracts disclosed by the Company to SGX-ST via SGXNET, there were no other material contracts entered into by the Company or any of its subsidiaries of the Group with parties in which a Director or controlling shareholder has interests in during the financial year ended 30 June 2016.


Annual Report 2016

41

finanCial Contents

PAGE

Directors’ Statement 42

Independent Auditor’s Report 47

Consolidated Statement of Comprehensive Income 48

Balance Sheets 49

Consolidated Statement of Changes in Equity 50

Consolidated Statement of Cash Flows 51

Notes to the Financial Statements 52

Supplementary Information 104

Statistics of Shareholdings 106

Notice of Annual General Meeting 108

Proxy Form


42

The directors present their statement to the shareholders together with the audited financial statements of the Group for the financial year ended 30 June 2016 and the balance sheet of the Company as at 30 June 2016.

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 48 to 103 are drawn up so as to give a true and fair view of the financial position of the Company and of the Group as at 30 June 2016 and the financial performance, changes in equity and cash flows of the Group for the financial year covered by the consolidated financial statements; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

Directors

The directors of the Company in office at the date of this report are as follows:

Dr Gan See Khem Professor Annie Koh (Appointed on 1 March 2016) Dr Cheah Way Mun Professor Tan Chin Tiong Ms Chin Wei JiaMr Chin Wei Yao (Appointed on 23 October 2015)

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than as disclosed under “Share options and share awards” in this report.

direCtors' statementfor the financial year ended 30 June 2016

Annual Report 2016

43

Directors’ interests in shares or debentures

According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares, options or debentures of the Company or its related corporations, except as follows:

Holdings registered in name of director or nominee

Holdings in which a directoris deemed to have an interest

At30.6.2016

At 1.7.2015 or date of appointment,

if laterAt

30.6.2016

At 1.7.2015 or date of appointment,

if later

Immediate and ultimate holding companyNam See Investment (Pte) Ltd.– Ordinary SharesDr Gan See Khem 2,785,575 2,785,575 3,214,425 3,214,425Ms Chin Wei Jia 1,000,000 1,000,000 – –Mr Chin Wei Yao 1,000,000 1,000,000 – –

Health Management International Ltd– Ordinary SharesDr Gan See Khem 5,164,600 5,164,600 290,597,495 289,733,195Dr Cheah Way Mun 16,422,602 16,163,602 – –Professor Tan Chin Tiong 2,285,627 2,285,627 – –Ms Chin Wei Jia 4,742,400 4,742,400 – –Mr Chin Wei Yao 2,147,600 2,147,600 – –

– Share OptionsDr Gan See Khem 1,512,000 1,512,000 2,268,000 2,268,000Ms Chin Wei Jia 1,512,000 1,512,000 – –

– Share Awards Dr Gan See Khem 3,528,000 3,528,000 5,292,000 5,292,000Ms Chin Wei Jia 3,528,000 3,528,000 – –

The directors’ interests in the ordinary shares and convertible securities of the Company as at 21 July 2016 were the same as those as at 30 June 2016.

Share options and share awards

On 23 October 2008, the shareholders of the Company approved the adoption of HMI Employee Share Option Scheme (“HMI ESOS”) and HMI Performance Share Plan (“HMI PSP”) to grant equity-based incentives to all its eligible employees. The maximum aggregate number of shares on which options may be granted under the HMI ESOS and awards may be granted under the HMI PSP is 15% of the total issued equity shares excluding treasury shares of the Company. In the event of a bonus issue, rights issue or a capital reconstruction, the number of options and awards and the exercise price would be adjusted in accordance with the formula stipulated in the HMI ESOS and the HMI PSP.



44

Share options and share awards (continued)

HMI Employee Share Option Scheme

On 14 November 2014, the Company granted certain directors and other key management personnel, options to subscribe for 3,780,000 ordinary shares of the Company at an exercise price of S$0.28 per share under the HMI ESOS.

The exercise price of the options is determined as the average of the closing prices of the Company’s ordinary shares as quoted on the Singapore Exchange for five market days immediately preceding the date of the grant. The vesting of the options is conditional on the directors and key management personnel completing one year of service to the Group from the date of the grant. Once they have vested, the options are exercisable immediately and will expire after a period of ten years from date of grant. These options are exercisable from 14 November 2015 and expire on 13 November 2024.

The fair value of the options granted was estimated to be S$386,000 (approximately RM 1,081,000), using the Black-Scholes Option Pricing model.

The details of the options granted are as follows:

Number of unissued ordinary shares of the Company under HMI ESOS

Name

Granted in financial year

ended 30 June 2016

Aggregate granted since

commencement of scheme to 30 June 2016

Aggregate exercised since commencement

of scheme

Aggregate outstanding

as at 30 June 2016

DirectorsDr Gan See Khem – 1,512,000 – 1,512,000Ms Chin Wei Jia – 1,512,000 – 1,512,000

Other key management personnelDr Chin Koy Nam – 756,000 – 756,000

– 3,780,000 – 3,780,000


Annual Report 2016

45

Share options and share awards (continued)

HMI Performance Share Plan

On 14 November 2014, the Company granted certain directors and other key management personnel 8,820,000 awards, comprising of 8,820,000 shares under the HMI PSP. The actual number of shares to be released could be zero or a maximum of 8,820,000, at nil exercise price, depending on the achievement of pre-determined performance targets. As at 30 June 2016, no awards were vested.

The fair value of the awards granted was estimated to be S$2,470,000 (approximately RM 6,920,000) using the Black-Scholes Option Pricing model.

The details of the awards granted are as follows:

Number of unissued ordinary shares of the Company under HMI PSP

Name

Granted in financial year

ended 30 June 2016

Aggregate granted since

commencement of scheme to 30 June 2016

Aggregate released since

commencement of scheme

Aggregate not released as at 30 June 2016

DirectorsDr Gan See Khem – 3,528,000 – 3,528,000Ms Chin Wei Jia – 3,528,000 – 3,528,000

Other key management personnelDr Chin Koy Nam – 1,764,000 – 1,764,000

– 8,820,000 – 8,820,000



46

Audit and Risk Management Committee

The members of the Audit and Risk Management Committee at the end of the financial year were as follows:

Professor Annie Koh (Chairman) (Appointed on 1 March 2016)Professor Tan Chin TiongDr Cheah Way Mun

All members of the Audit and Risk Management Committee are non-executive directors and are independent.

The Audit and Risk Management Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Audit and Risk Management Committee reviewed:

• the scope and the results of internal audit procedures with the internal auditor;

• the audit plan and the reports of the Company’s independent auditor, and any recommendations on internal accounting controls arising from the statutory audit;

• the assistance given by the Company’s management to the independent auditor; and

• the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 30 June 2016 before their submission to the Board of Directors, as well as the Independent Auditor’s Report on the balance sheet of the Company and the consolidated financial statements of the Group.

The Audit and Risk Management Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

Independent auditor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.

On behalf of the directors

DR GAN SEE KHEMDirector

PROFESSOR ANNIE KOHDirector

21 September 2016


Annual Report 2016

47

Report on the Financial Statements

We have audited the accompanying financial statements of Health Management International Ltd (the “Company”) and its subsidiaries (the “Group”) set out on pages 48 to 103, which comprise the consolidated balance sheet of the Group and balance sheet of the Company as at 30 June 2016, and the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2016, and of the financial performance, changes in equity and cash flows of the Group for the financial year ended on that date.

Report on other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary corporations incorporated in Singapore, of which we are the auditors, have been properly kept in accordance with the provisions of the Act.

PricewaterhouseCoopers LLPPublic Accountants and Chartered Accountants

Singapore, 21 September 2016

independent auditor’s reportto the shareholders of Health management international ltd


48

GroupNote 2016 2015

RM’000 RM’000

Revenue 4 397,810 345,224Cost of services 7 (268,033) (242,166)Gross profit 129,777 103,058

Other income 4 6,111 4,916

Other losses 5 (3,055) (3,807)

Expenses– Distribution and marketing 7 (2,703) (2,458)– Administrative 7 (65,162) (46,726)– Finance 6 (3,637) (3,354)

Share of profit of associated corporations 14 2,051 3,134

Profit before income tax 63,382 54,763

Income tax expense 8 (17,931) (1,406)

Profit after tax 45,451 53,357

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Currency translation differences arising from consolidation– Gains 3,307 3,260

Total comprehensive income 48,758 56,617

Profit attributable to:Equity holders of the Company 19,899 27,643Non-controlling interests 25,552 25,714

45,451 53,357

Total comprehensive income attributable to:Equity holders of the Company 23,202 30,897Non-controlling interests 25,556 25,720

48,758 56,617

Earnings per share for profit attributable to equity holders of the Company (expressed in RM cents per share) 9

– Basic 3.45 4.79– Diluted 3.38 4.69

Consolidated statement of CompreHensive inComefor the financial year ended 30 June 2016

The accompanying notes form an integral part of these financial statements.

Annual Report 2016

49

Group CompanyNote 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

ASSETSCurrent assetsCash and cash equivalents 10 78,928 39,076 16,314 2,223Trade and other receivables 11 57,400 87,842 42,107 45,792Tax recoverable 8 6 21 – –Inventories 12 14,050 12,810 – –Other current assets 13 4,167 3,996 67 230

154,551 143,745 58,488 48,245

Non-current assetsTrade and other receivables 11 121 107 121 107Other non-current assets 13 436 409 114 104Investments in associated corporations 14 46,355 37,990 19,945 13,814Investments in subsidiaries 15 – – 57,942 56,418Property, plant and equipment 16 177,867 180,475 975 743Deferred income tax assets 21 3,555 9,040 – –

228,334 228,021 79,097 71,186Total assets 382,885 371,766 137,585 119,431

LIABILITIESCurrent liabilitiesTrade and other payables 17 79,299 66,209 2,953 3,407Current income tax liabilities 8 3,673 1,033 – –Borrowings 18 27,495 28,885 13,408 16,053Deferred income 20 2,062 1,236 – –

112,529 97,363 16,361 19,460Non-current liabilitiesTrade and other payables 17 18,251 52,847 – –Borrowings 18 14,362 11,691 3,655 182Deferred income tax liabilities 21 5,479 4,736 – –

38,092 69,274 3,655 182Total liabilities 150,621 166,637 20,016 19,642

NET ASSETS 232,264 205,129 117,569 99,789

EQUITYCapital and reserves attributable to equity

holders of the CompanyShare capital 22 90,564 90,564 90,564 90,564Treasury shares 22 (1,022) (47) (1,022) (47)Currency translation reserve 23(a) 12,417 9,114 21,926 16,296Other reserves 23(b) 7,130 3,094 7,078 3,042Retained earnings/

(accumulated losses) 23(c) 61,553 41,654 (977) (10,066)170,642 144,379 117,569 99,789

Non-controlling interests 61,622 60,750 – –TOTAL EQUITY 232,264 205,129 117,569 99,789


BalanCe sHeetsas at 30 June 2016


50

Attributable to equity holders of the Company

Share capital

Treasury shares

Currency translation

reserveOther

reserves Retained earnings Total

Non-controllingInterests

Total equity

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016Beginning of financial year 90,564 (47) 9,114 3,094 41,654 144,379 60,750 205,129

Profit after tax – – – – 19,899 19,899 25,552 45,451Other comprehensive income – – 3,303 – – 3,303 4 3,307Total comprehensive income – – 3,303 – 19,899 23,202 25,556 48,758

Redemption of redeemable convertible preference share – – – – – – (1,080) (1,080)

Dividend declared to non-controlling interests by subsidiaries * – – – – – – (24,504) (24,504)

Capital injection in a subsidiary – – – – – – 900 900Purchase of treasury shares – (975) – – – (975) – (975)Share-based payment 23(b) – – – 4,036 – 4,036 – 4,036 End of financial year 90,564 (1,022) 12,417 7,130 61,553 170,642 61,622 232,264

2015Beginning of financial year 90,564 (47) 5,860 68 14,011 110,456 41,737 152,193

Profit after tax – – – – 27,643 27,643 25,714 53,257Other comprehensive income – – 3,254 – – 3,254 6 3,260Total comprehensive income – – 3,254 – 27,643 30,897 25,720 56,617

Dividend paid to non-controlling interests by subsidiaries – – – – – – (6,707) (6,707)

Share-based payment 23(b) – – – 3,026 – 3,026 – 3,026 End of financial year 90,564 (47) 9,114 3,094 41,654 144,379 60,750 205,129

An analysis of the movements in each category within “Currency translation reserve” and “Other reserves” are presented in Note 23(a) and 23(b) respectively.

* In 2016, out of the dividend declared to non-controlling interests by a subsidiary of RM 24,504,000, RM 14,294,000 was settled in cash, RM 10,210,000 was unpaid as at 30 June 2016 and included within “Trade and other payables” in Note 17 to the Financial Statements.


Consolidated statement of CHanGes in equityfor the financial year ended 30 June 2016

Annual Report 2016

51

Note 2016 2015RM’000 RM’000

Cash flows from operating activities

Profit after tax 45,451 53,357Adjustments for:– Income tax 17,931 1,406– Share-based payment expense 4,036 3,026– Reversal of allowance for impairment of trade receivables (109) (956)– Allowance for impairment of trade and other receivables 3,683 2,447– Trade and other receivables written off 6 477– Depreciation of property, plant and equipment 18,306 16,239– Loss on disposal and write-off of property, plant and equipment 95 76– Interest income (1,703) (1,690)– Interest expense 3,637 3,354– Share of profit of associated corporations (2,051) (3,134)– Currency translation differences 845 1,073Operating cash flow before working capital changes 90,127 75,675

Change in operating assets and liabilities– Inventories (1,240) (7,499)– Trade and other receivables 372 (17,509)– Other current and non-current assets (148) 184– Trade and other payables 4,390 7,958– Deferred income 757 45Cash provided by operations 94,258 58,854

Interest paid (3,637) (3,354)Income tax paid (9,048) (7,530)Net cash provided by operating activities 81,573 47,970

Cash flows from investing activitiesRepayment of loans from associated corporations (7,840) 1,282Additions to property, plant and equipment (11,244) (10,682)Proceeds from disposal of property, plant and equipment 175 256Capital injection in an associated corporation 14 (5,269) –Interest received 1,703 1,690Net cash used in investing activities (22,475) (7,454)

Cash flows from financing activitiesDrawdown of loan from holding company – 529Drawdown of borrowings 1,772 –Repayment of borrowings (5,553) (11,264)Repayment of lease liabilities (4,291) (6,501)Dividends paid to non-controlling interests by a subsidiary (14,294) (6,707)Capital injection in a subsidiary from non-controlling interests 900 –Repayment of amount owing to non-controlling interests of a subsidiary (996) –Redemption of redeemable convertible preference shares in a subsidiary by non-

controlling interests (1,080) –Purchase of treasury shares (975) –Net cash used in financing activities (24,517) (23,943)

Net increase in cash and cash equivalents 34,581 16,573Cash and cash equivalents at beginning of financial year 38,835 22,017Effects of currency translation on cash and cash equivalents 910 245Cash and cash equivalents at end of financial year 10 74,326 38,835


Consolidated statement of CasH flowsfor the financial year ended 30 June 2016


52

notes to tHe finanCial statementsfor the financial year ended 30 June 2016

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General information

Health Management International Ltd (the “Company”) is listed on the Singapore Exchange and incorporated and domiciled in Singapore. The address of its registered office is 7 Temasek Boulevard #12-10, Suntec Tower One, Singapore 038987.

The principal activities of the Company are those of investment holding and provision of management services. The principal activities of its subsidiaries are stated in Note 33 to the financial statements.

2. Significant accounting policies

2.1 Basis of preparation

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

Interpretations and amendments to published standards effective in 2016

On 1 July 2015, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”) that are mandatory for application for the financial year. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the accounting policies of the Group and the Company and had no material effect on the amounts reported for the current or prior financial years.

2.2 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the rendering of services in the ordinary course of the Group’s activities. Revenue is presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group’s activities are met as follows:

(a) Rendering of services

Revenue from hospital and other healthcare services is recognised in the period in which the services are rendered.

Revenue from healthcare education and training is recognised on a straight-line basis over the duration of the relevant course. Revenue received in advance is deferred and recognised in the balance sheet as deferred income.

(b) Interest income

Interest income is recognised using the effective interest method.

Annual Report 2016

53


2. Significant accounting policies (continued)

2.2 Revenue recognition (continued)

(c) Car park income

Car park income is recognised on a straight-line time proportion basis.

(d) Rental income

Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over the lease term.

2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date the control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests are that part of the net results of operations and of net assets of subsidiaries attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance.

(ii) Acquisition

The acquisition method of accounting is used to account for business combinations by the Group.

The consideration transferred for the acquisition of a subsidiary or business comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes any contingent consideration arrangement and any pre-existing equity interest in the subsidiary measured at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.


54



2.3 Group accounting (continued)

(a) Subsidiaries (continued)

(ii) Acquisition (continued)

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of (a) the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over (b) the fair values of the identifiable assets acquired net of the fair values of the liabilities and any contingent liabilities assumed, is recorded as goodwill.

(iii) Disposals

When a change in the Group’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts previously recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific standard.

Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognised in profit or loss.

Please refer to the paragraph “Investments in subsidiaries and associated corporations” for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.

(b) Transactions with non-controlling interests

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Company. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised within equity attributable to the equity holders of the Company.

(c) Associated corporations

Associated corporations are entities over which the Group has significant influence, but not control, and generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments in associated corporations are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any.

(i) Acquisitions

Investments in associated corporations are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Annual Report 2016

55



2.3 Group accounting (continued)

(c) Associated corporations (continued)

(ii) Equity method of accounting

In applying the equity method of accounting, the Group’s share of its associated corporations’ post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post-acquisition movements and distributions received from the associated corporations are adjusted against the carrying amount of the investments. When the Group’s share of losses in an associated corporation equals to or exceeds its interest in the associated corporation, the Group does not recognise further losses, unless it has legal or constructive obligations to make, or has made, payments on behalf of the associated corporations. If the associated corporation subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Unrealised gains/losses on transactions between the Group and its associated corporations are eliminated against the asset transferred to the extent of the Group’s interest in the associated corporations. Unrealised losses are also eliminated unless the transactions provide evidence of impairment of the assets transferred. The accounting policies of associated corporations are changed where necessary to ensure consistency with the accounting policies adopted by the Group.

(iii) Disposals

Investments in associated corporations are derecognised when the Group loses significant influence. If the retained equity interest in the former associated corporation is a financial asset, the retained equity interest is measured at fair value. The difference between the carrying amount of the retained interest at the date when significant influence or joint control is lost, and its fair value and any proceeds on partial disposal, is recognised in profit or loss.

Gains and losses arising from partial disposals or dilutions in investments in associated corporations in which significant influence is retained are recognised in profit or loss.

Please refer to the paragraph “Investment in subsidiaries and associated corporations” for the accounting policy on investments in associated corporations in the separate financial statements of the Company.

2.4 Property, plant and equipment

(a) Measurement

All items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The projected cost of dismantlement, removal or restoration is also included as part of the cost of property, plant and equipment if the obligation for the dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.


56



2.4 Property, plant and equipment (continued)

(b) Depreciation Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

Useful livesLeasehold land Over the lease term of 99 years commencing from 2002Leasehold buildings 50 yearsElectrical equipment 10 yearsMedical equipment 8 - 10 yearsMotor vehicles 5 - 10 yearsFurniture, office equipment and housekeeping

equipment3 - 10 years

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise.

(c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in profit or loss within “Other losses”.

2.5 Investments in subsidiaries and associated corporations Loan to an associated corporation

Investments in subsidiaries and associated corporations, including loans and receivables from subsidiaries or associated corporations that form part of the net investment in the subsidiary or associated corporation are carried at cost less accumulated impairment losses in the Company and Group’s balance sheet. On disposal of such investments, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

2.6 Impairment of non-financial assets Property, plant and equipment Investments in subsidiaries and associated corporations

Property, plant and equipment and investments in subsidiaries and associated corporations are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash generating unit (“CGU”) to which the asset belongs.

Annual Report 2016

57



2.6 Impairment of non-financial assets (continued)

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss.

An impairment loss for an asset is reversed only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset is recognised in profit or loss.

2.7 Financial assets

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as “other current and non-current assets” (Note 13), “trade and other receivables” (Note 11) and “cash and cash equivalents” (Note 10) on the balance sheet. Financial assets are initially recognised at fair value plus transaction costs.

Loans and receivables are derecognised when the rights to receive cash flows from the customers have expired or have been received and the Group has substantially transferred all risks and rewards of ownership.

Receivables that form part of the net investment in subsidiaries or associated corporations are carried at cost less accumulated impairment losses.

The Group assesses at each balance sheet date whether there is objective evidence that loans and receivables are impaired and recognises an allowance for impairment when such evidence exists. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss.

The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.


58



2.8 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.9 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

2.10 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of financial period which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are presented as non-current liabilities.

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method.

2.11 Fair value estimation of financial assets and liabilities

The carrying amounts of current financial assets and liabilities carried at amortised cost approximate their fair values. The fair values of non-current financial assets and liabilities are computed based on cash flows discounted at market borrowing rates.

2.12 Leases

The Group leases medical equipment and motor vehicles under finance leases. Land and buildings and office premises are leased under operating leases.

(a) Lessee – Finance leases

Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases.

The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as property, plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair values of the leased assets and the present value of the minimum lease payments.

Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in profit or loss on a basis that reflects a constant periodic rate of interest on the finance lease liability.

(b) Lessee - Operating leases

Leases where substantially all risks and rewards incidental to ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease.

Annual Report 2016

59



2.13 Inventories

Inventories, including pharmaceutical and surgical medicine, medical supplies and medical suites held for sale, are carried at lower of cost and net realisable value. Cost is determined using the weighted average basis or specific identification basis, and includes all costs in bringing the inventories to their present location and condition. In the case of medical suites held for sale, cost is determined based on acquisition costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14 Income taxes

Current income tax for current and prior periods is recognised at the amounts expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated corporations, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date; and

(ii) based on the tax consequence that would follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income tax are recognised as income or expenses in profit or loss.

2.15 Employee compensation

(a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The Group’s contributions are recognised as employee compensation expense when they are due.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.


60



2.15 Employee compensation (continued)

(c) Share-based compensation

The Group operates equity-settled, share-based compensation plans. The value of the employee services received in exchange for the grant of options and awards for shares is recognised as an expense with a corresponding increase in the share-based payment reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options and awards for shares granted on the date of the grant. Non-market vesting conditions are included in the estimation of the number of shares under options that are expected to become exercisable on the vesting date. At each balance sheet date, the Group revises its estimates of the number of shares under options and awards for shares that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimates in profit or loss, with a corresponding adjustment to the share-based payment reserve over the remaining vesting period.

2.16 Currency translation

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The functional currency of the Company is the Singapore Dollar. The presentation currency of the Company and the Group is the Malaysian Ringgit as it provides a better understanding of the Group’s operations, which are predominantly based in Malaysia.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency exchange differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss.

In preparation of the consolidated financial statements of the Group, exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation shall be recognised in profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, as appropriate. In the financial statements that include the foreign operation and the reporting entity, such exchange differences shall be recognised initially in a separate component of equity and recognised in profit or loss on disposal of the net investment.

(c) Translation of Group entities’ financial statements

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing exchange rates at the reporting date; (ii) income and expenses are translated at average exchange rates (unless the average is not a reasonable

approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) all resulting currency translation differences are recognised in other comprehensive income and accumulated in the currency translation reserve. These currency translation differences are reclassified to profit or loss on disposal or partial disposal of the entity giving rise to such reserve.

Annual Report 2016

61



2.17 Provisions

Provision for other liabilities and charges are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.

2.18 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments.

2.19 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include cash on hand which are subject to an insignificant risk of change in value and bank overdrafts. Bank overdrafts are presented as current borrowings on the balance sheet.

2.20 Government grants

Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions.

Government grants receivable are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income.

2.21 Share capital and treasury shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.

When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the carrying amount which includes the consideration paid and any directly attributable transaction cost is presented as a component within equity attributable to the Company’s equity holders, until they are cancelled, sold or reissued.

When treasury shares are subsequently cancelled, the carrying amounts are netted off against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company.

When treasury shares are subsequently sold or reissued, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction costs and related income tax, is recognised in the capital reserve.

2.22 Dividends to Company’s shareholders

Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.


62


3. Critical accounting estimates, assumptions and judgements

(a) Current and deferred income taxes

The Group is subject to income taxes in different jurisdictions. In determining the income tax liabilities, management continues to take positions in tax returns based on well-grounded positions taken in good faith. Judgements concerning positions taken may change as developments in case law, new rulings or regulations by the tax authorities become available.

Deferred tax assets are recognised for unutilised tax losses, unabsorbed capital allowances and unutilised tax credits to the extent that it is probable that taxable profit will be available against which the losses, capital allowances and tax credits can be utilised. This involves judgement regarding the future financial performance of the Companies within the Group and the extent to which deferred tax asset can be recognised.

Where the final outcome is different from the amounts that were initially recorded in the financial statements, such differences will impact the current and deferred income tax provisions in the period in which such determination is made.

(b) Allowance for impairment of receivables

The Group assesses at the end of each reporting period whether there is objective evidence that receivables have been impaired. The impairment loss is determined based on a review of the current status of the existing receivables which includes a review over payments received after the balance sheet date, the aging of debts, customer disputes, litigation and any known deterioration in the credit worthiness of the debtors. As a result of management’s review, the total allowance for impairment of receivables amounted to RM 15,183,000 (2015: RM 12,033,000) as at 30 June 2016. The allowance for impairment is adjusted periodically to reflect the actual and anticipated recovery based on the information available.

4. Revenue and other income

Group2016 2015

RM’000 RM’000

RevenueRevenue from hospital and other healthcare services 388,188 336,756Healthcare education and training 9,622 8,468Total revenue 397,810 345,224

Other incomeCar park income 597 632Rental income 757 440Grant income 1,074 525

Interest income– bank deposits 922 732– loans to associated corporations 781 958

1,703 1,690

Sponsorship income 775 160Others 1,205 1,469Total other income 6,111 4,916

Annual Report 2016

63


5. Other losses

Group2016 2015

RM’000 RM’000

Currency exchange losses (2,960) (3,731)Loss on disposal and write-off of property, plant and equipment (95) (76)

(3,055) (3,807)

6. Finance expenses

Group2016 2015

RM’000 RM’000

Interest expense:– bank borrowings 1,418 1,888– finance lease liabilities 495 612– loan from holding company 214 172– amounts due to associated corporations 1,510 682

3,637 3,354


64


7. Expenses by nature

Group2016 2015

RM’000 RM’000

Depreciation of property, plant and equipment (Note 16) 18,306 16,239

Fees for audit services paid/payable to:– Auditor of the Company 443 428– Other auditors* 176 146

Fees for non-audit services paid/payable to:– Other auditors* 325 298

Directors’ fee:– Directors of the Company 966 800– Directors of subsidiaries 269 308

Staff costs:(i) Directors’ remuneration other than fees (a) Directors of the Company – Salaries and other related expenses 5,652 3,643 – Contribution to defined contribution plans 164 81 – Share-based payment expenses 3,229 2,421

(b) Directors of subsidiaries – Salaries and other related expenses 388 381 – Contribution to defined contribution plans 43 43

(ii) Other than directors: – Salaries and other related expenses 62,340 56,279 – Contribution to defined contribution plans 6,851 5,932 – Share-based payment expenses 807 605

Included in cost of services:– Medical materials costs 70,983 64,680– Medical consultants’ fees 113,908 99,098– Educators’ fees 1,619 1,267

Rental and other operating leases 10,159 9,751Advertising expenses 2,574 2,226Levies payable 1,339 395Utilities 6,896 6,340Repairs and maintenance 5,719 6,890Allowance for impairment of trade and other receivables 3,683 2,447Reversal of allowance for impairment of trade receivables (109) (956)Trade and other receivables written off 6 477Professional fees 4,010 2,737Others 15,152 8,394Total cost of services, distribution and marketing expenses and

administrative expenses 335,898 291,350

* Includes the network of member firms of PricewaterhouseCoopers International Limited (PwCIL). The Audit and Risk Management Committee has undertaken a review of all non-audit services provided by the auditors and they would not, in the Audit and Risk Management Committee’s opinion, affect the independence of the auditors. The Company complies with Rule 712 and Rule 715 in relation to its auditing firms.

Annual Report 2016

65


8. Income taxes

(a) Income tax expense

Group2016 2015

RM’000 RM’000

Tax expense attributable to profit is made up of:Current income tax – Singapore 107 71– Foreign 11,846 6,600Deferred income tax (Note 21) 6,228 (5,387)

18,181 1,284

(Over)/ under provision in preceding financial years– current income tax (b) (250) 122

(250) 12217,931 1,406

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows:

Group2016 2015

RM’000 RM’000

Profit before tax 63,382 54,763Share of profit of associated corporations (2,051) (3,134)

61,331 51,629

Tax calculated at a tax rate of 17% (2015: 17%) 10,426 8,777Effects of:– Different tax rates in other countries 4,917 4,477– Expenses not deductible for tax purposes 4,409 3,527– Income not subject to tax (140) (92)– Utilisation of deferred tax assets previously unrecognised – (4,440)– Recognition of previously unrecognised deferred tax assets on temporary

differences – (11,587)– Tax expenses arising from elimination of upstream transactions with associated

corporations – 639– Tax incentives (1,431) (17)Tax charge 18,181 1,284


66


8. Income taxes (continued)

(b) Movements in current income tax liabilities/(tax recoverable)

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Beginning of financial year 1,012 1,749 – –Income tax paid (9,048) (7,530) (106) (71)Tax payable on profit

for the current financial year 11,953 6,671 106 71(Over)/ under provision in preceding

financial years (250) 122 – –End of financial year 3,667 1,012 – –

Composition:Tax recoverable (6) (21) – –Current income tax liabilities 3,673 1,033 – –End of financial year 3,667 1,012 – –

9. Earnings per share

(a) Basic earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Group2016 2015

Net profit attributable to equity holders of the Company (RM’000) 19,899 27,643

Weighted average number of ordinary shares outstanding for basic earnings per share 576,840,061 577,071,286

Basic earnings per share (RM cents per share) 3.45 4.79

Annual Report 2016

67


9. Earnings per share (continued)

(b) Diluted earnings per share

Diluted earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year adjusted for the effects of dilutive potential ordinary shares.

Group2016 2015

Net profit attributable to equity holders of the Company (RM’000) 19,899 27,643

Weighted average number of ordinary shares adjusted for the effects of dilutive potential ordinary shares 589,440,061 589,671,286

Basic earnings per share (RM cents per share) 3.38 4.69

10. Cash and cash equivalents

For the purpose of presenting the consolidated statement of cash flows, cash and cash equivalents comprise the following:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash at bank and on hand 78,928 39,076 16,314 2,223Less: Bank overdrafts (Note 18) (4,602) (241) – –Cash and cash equivalents per consolidated

statement of cash flows 74,326 38,835 16,314 2,223


68


11. Trade and other receivables

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CurrentTrade receivables – third parties 50,790 51,644 – –Less: Allowance for impairment of receivables (8,837) (6,054) – –Trade receivables – net 41,953 45,590 – –

Other receivables 4,446 4,355 10,651 42Less: Allowance for impairment of receivables (919) (897) – –Other receivables – net 3,527 3,458 10,651 42

Amount due from subsidiaries – trade – – 3,188 3,765Amount due from subsidiaries – non-trade (a) – – 17,499 18,453Amount due from associated corporations

– non-trade 12,431 39,218 10,405 23,247Less: Allowance for impairment of receivables

(Note 14(b)) (875) (709) – –Amount due from associated corporations

– non-trade – net (b) 11,556 38,509 10,405 23,247Amount due from related parties 364 285 364 285

57,400 87,842 42,107 45,792

Non-currentTrade receivables – third parties 1,194 1,194 – –Less: Allowance for impairment of receivables (1,194) (1,194) – –Trade receivables – third parties - net – – – –

Amount due from associated corporations - non-trade 3,479 3,286 3,479 3,286

Less: Allowance for impairment of receivables (Note 14(b)) (3,358) (3,179) (3,358) (3,179)

Amount due from associated corporations – non-trade – net (c) 121 107 121 107

(a) The non-trade amounts due from subsidiaries represent advances which are unsecured, interest-free and are recoverable on demand.

(b) The non-trade amounts due from associated corporations are unsecured and recoverable on demand. Out of these balances, an amount of RM Nil (2015: RM14,327,000) bears interest at Nil% (2015: 6.95%) per annum.

(c) An net amount of RM 121,000 (2015: RM 107,000) has been loaned to an associated corporation as its working capital. The settlement is not due in the next twelve months. Accordingly, this amount is classified as non-current. The balance is unsecured and bears interest at 6.95% (2015: 6.95%) per annum.

Annual Report 2016

69


12. Inventories

Group2016 2015

RM’000 RM’000

At costPharmaceutical and surgical medicine 4,327 3,642Medical supplies 3,941 3,386Medical suites held for sale (a) 5,782 5,782

14,050 12,810

The cost of inventories recognised as an expense and included in cost of services amounted to RM 70,983,000 (2015: RM 64,680,000).

(a) In the last financial year, the medical suites held for sale were acquired as part of an asset restructuring exercise. Please refer to Note 16(c) for more details.

13. Other assets

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CurrentDeposits 1,338 499 – 55Prepayments 1,963 2,343 67 175Down payment for purchase of plant and

equipment 866 1,154 – –4,167 3,996 67 230

Non-CurrentDeposits 436 409 114 104


70


14. Investments in associated corporations

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CostBeginning of financial year 17,743 16,293Capital injection in an associated corporation (d) 5,269 –Translation difference 1,129 1,450End of financial year 24,141 17,743

Accumulated impairment lossesBeginning of financial year (3,929) (3,608)Impairment loss made (47) –Translation difference (220) (321)End of financial year (b) (4,196) (3,929)

Net carrying value 19,945 13,814

Beginning of financial year 37,990 37,486Capital injection in associated corporations (d) 5,269 –Share of profit of associated corporations 2,051 3,134Elimination of upstream transactions (e) – (3,759)Currency translation differences 1,045 1,129End of financial year 46,355 37,990

Details of associated corporations are provided in Note 33.

(a) In 2015, investments in an associated corporation of RM 50,000 were pledged as security for bank borrowings of the Company. During the financial year, the charge was fully satisfied and discharged.

(b) The Company has accumulated impairment losses of RM 4,196,000 (2015: RM 3,929,000) for impairment of its investment in certain associated corporations and an allowance of RM 4,233,000 (2015: RM 3,888,000) for impairment of receivables from the associated corporations (Note 11) which have been dormant for the current and past financial years.

(c) During the financial year, the Group has not recognised its share of loss of certain associated corporations amounting to RM 145,000 (2015: RM 141,000) because the Group’s cumulative share of losses exceeds its interest in the associated corporations and the Group has no obligation in respect of those losses. The cumulative unrecognised losses amount to RM 2,091,000 (2015: RM 1,946,000) at the balance sheet date.

(d) During the financial year, capital injection of RM 5,269,000 in associated corporations was made by way of cash.

Annual Report 2016

71


14. Investments in associated corporations (continued)

(e) In 2015, the Group acquired property, plant and equipment (Note 16) and medical suites held for sale (Note 12) amounting to RM 35,045,000 and RM 5,782,000 respectively from its associated corporations as part of an asset restructuring exercise. The Group eliminated its share of losses on disposal amounting to RM 3,759,000 arising from this transaction against property, plant and equipment. Please refer to Note 16(c) for more details of the transaction.

Set out below are the associated corporations of the Group as at 30 June 2016, which, in the opinion of the directors, are material to the Group.

Name of entityPlace of business/ country

of incorporation% of ownership

interest

Mahkota Commercial Sdn. Bhd. (“MCSB”) Malaysia 48.95

Regency Medical Centre (Seri Alam) Sdn. Bhd. (“RMCSA”) Malaysia 29.00

MCSB is an investment holding company with subsidiaries holding investment properties in Malaysia. MCSB and its subsidiaries (“MCSB Group”) held medical suites, hospital and commercial units within Mahkota Medical Centre (“MMC”) and leased the use of the assets to MMC. Upon the completion of the asset restructuring exercise in 2015, MCSB and its subsidiaries became dormant, except for RMCSA which is an asset holding company and leases its hospital building to Regency Specialist Hospital for its day-to-day operations.

There are no contingent liabilities relating to the Group’s interest in the associated corporations.

Summarised financial information for associated corporations

Set out below are the summarised consolidated financial information for MCSB Group and RMCSA. RMCSA is a subsidiary of MCSB by virtue of MCSB’s 65% equity interest in RMCSA and its results are included in the consolidated financial information of MCSB Group.

Summarised balance sheets

MCSB Group RMCSAAs at 30 June As at 30 June

2016 2015 2016 2015RM’000 RM’000 RM’000 RM’000

Current assets 10,732 10,981 9,482 6,686Includes:– Cash and cash equivalents 3,916 1,275 2,668 693

Current liabilities 27,066 67,466 5,773 19,570Includes:– Financial liabilities (excluding trade

and other payables) 3,491 4,150 3,491 4,150

Non-current assets 105,400 138,369 100,840 100,000

Non-current liabilities 19,340 22,135 58,294 61,069Includes:– Financial liabilities 7,936 11,428 47,036 50,528– Other liabilities 11,403 10,707 11,258 10,541

Net assets 69,726 59,749 46,255 26,047


72



Summarised statements of comprehensive income

MCSB Group RMCSAFor the financial year ended

30 JuneFor the financial year ended

30 June2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Revenue 6,706 9,474 6,706 6,549Interest income 1,510 687 – –

ExpensesIncludes:– Interest expense (1,846) (2,237) (1,846) (2,230)

Profit/ (Loss) before income tax 4,727 (3,353) 2,925 2,055Income tax (expense)/ credit (1,050) 1,657 (717) (637)

Profit/ (Loss) after income tax and total comprehensive income/ (loss) 3,677 (1,696) 2,208 1,418

Profit/ (Loss) attributable to:Equity holders of the Company 2,910 (2,310) 2,208 1,418Non-controlling interests 767 614 – –

Share of associates’ profit/ (loss) 1,424 (1,131) 640 411

Elimination of upstream transaction with associated corporations (Note14(e)) – 3,759 – –

1,424 2,628 640 411

The information above reflects the amounts presented in the financial statements of the associates (and not the Group’s share of those amounts), adjusted for differences in accounting policies between the Group and the associated corporations.

Annual Report 2016

73



Reconciliation of summarised financial information

Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interest in associated corporations.

MCSB Group RMCSA(a)

As at 30 June As at 30 June2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Net assets At 1 July 59,749 61,445 26,047 24,629Profit/ (Loss) for the year 3,677 (1,696) 2,208 1,418Issuance of shares by subsidiary to non-

controlling interest 6,300 – – –Issuance of preference shares – – 18,000 –At 30 June 69,726 59,749 46,255 26,047

Interest in associated corporations 34,130 29,247 13,414 7,554Adjustment for net assets attributable to non-

controlling interest (14,809) (11,357) – –Adjustment for quasi-equity investment – – 11,339 11,339Translation difference 9 7 2,272 1,200Carrying value 19,330 17,897 27,025 20,093

Add:Carrying value of individually immaterial

associated corporations * *

Carrying value of Group’s interest in associated corporations 46,355 37,990

(a) The Group has a direct equity interest of 29% in RMCSA.

* Immaterial being value below RM 1,000.


74


15. Investments in subsidiaries

Company 2016 2015

RM’000 RM’000

Equity investments at costBeginning of financial year 101,326 93,044Capital injection in a subsidiary (a) 4,350 –Redemption of redeemable convertible preference shares in a subsidiary (b) (5,220) –Translation differences 4,933 8,282End of financial year 105,389 101,326

Less: Impairment losses Beginning of financial year (44,908) (37,796) Additions during the financial year (d) – (3,538) Translation differences (2,539) (3,574) End of financial year (47,447) (44,908)

57,942 56,418

Details of subsidiaries are included in Note 33.

(a) During the financial year, a capital injection of RM 4,350,000 in a subsidiary was made by way of cash of RM 3,257,000 and a capitalisation of an amount due to the Company of RM 1,093,000.

(b) During the financial year, 52,200 redeemable convertible preference shares amounting to RM 5,220,000 of a subsidiary was redeemed.

(c) In 2015, investments in a subsidiary of RM 29,729,000 have been pledged as security for bank borrowings of the Company. During the financial year, the charge was fully satisfied and discharged.

(d) In 2015, provision for impairment losses, amounting to RM 3,538,000, was made for a subsidiary which is undergoing voluntary liquidation.

(e) Carrying value of non-controlling interests

2016 2015RM’000 RM’000

Mahkota Medical Centre Sdn. Bhd. (“MMCSB”) 70,355 75,137Regency Specialist Hospital Sdn. Bhd. (“RSHSB”) (3,587) (10,510)Other subsidiaries with immaterial non-controlling interest (5,146) (3,877)Total 61,622 60,750

Annual Report 2016

75


15. Investments in subsidiaries (continued)

Summarised financial information of subsidiaries with material non-controlling interests

Set out below is the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. These are presented before inter-company eliminations and adjusted for differences in accounting policies between the Group and the subsidiaries.

Summarised balance sheets

MMCSB RSHSBAs at 30 June As at 30 June

2016 2015 2016 2015RM’000 RM’000 RM’000 RM’000

CurrentAssets 70,843 80,151 56,937 52,252Liabilities 68,040 39,379 33,379 50,312Current net assets 2,803 40,772 23,558 1,940

Non-currentAssets 148,004 153,895 23,364 29,263Liabilities 13,292 47,786 1,511 920Non-current net assets 134,712 106,109 21,853 28,343

Net assets 137,515 146,881 45,411 30,283

Summarised income statements

MMCSB RSHSBFor year ended 30 June For year ended 30 June2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Revenue 248,016 229,019 141,659 110,851Profit before income tax 50,670 52,194 23,614 14,759Income tax (expense)/credit (12,035) (11,577) (5,486) 8,999Profit after tax and total comprehensive

income 38,635 40,617 18,128 23,758Dividends paid to non-controlling interests 24,504 4,595 – –


76


15. Investments in subsidiaries (continued)

Summarised cash flows

MMCSB RSHSB2016 2016

RM’000 RM’000

Cash flows from operating activitiesCash generated from operations 50,534 28,585Interest paid (1,997) (434)Income tax paid (8,864) (30)Net cash generated from operating activities 39,673 28,121

Net cash used in investing activities (3,959) (2,810)

Net cash used in financing activities (33,227) (7,782)

Net increase in cash and cash equivalents 2,487 17,529

Cash and cash equivalents at beginning of year 23,906 11,084Cash and cash equivalents at end of year 26,393 28,613

16. Property, plant and equipment

Leaseholdland

Leaseholdbuildings

Electricalequipment

Medicalequipment

Motorvehicles

Furniture,office

equipmentand

housekeepingequipment Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

The Group2016CostBeginning of financial year 19,038 102,036 33,586 108,044 2,964 32,418 298,086Currency translation

differences – – – – 54 195 249Additions – – 2,522 8,328 316 4,725 15,891Disposals/Write-offs – – (329) (920) (311) (1,776) (3,336)End of financial year 19,038 102,036 35,779 115,452 3,023 35,562 310,890

Accumulated depreciationBeginning of financial year 1,682 14,631 23,338 59,602 1,684 16,674 117,611Currency translation

differences – – – – 18 154 172Depreciation charge 189 2,615 2,301 9,290 382 3,529 18,306Disposals/Write-offs – – (243) (774) (306) (1,743) (3,066)End of financial year 1,871 17,246 25,396 68,118 1,778 18,614 133,023

Net book value at end of financial year 17,167 84,790 10,383 47,334 1,245 16,948 177,867

Annual Report 2016

77


16. Property, plant and equipment (continued)

Leaseholdland

Leaseholdbuildings

Electricalequipment

Medicalequipment

Motorvehicles

Furniture,office

equipmentand

housekeepingequipment Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

The Group2015CostBeginning of financial year 19,038 63,187 32,964 98,235 2,885 28,576 244,885Currency translation

differences – – 1 – 79 281 361Additions – 38,849 643 10,936 – 3,920 54,348Disposals/Write-offs – – (22) (1,127) – (359) (1,508)End of financial year 19,038 102,036 33,586 108,044 2,964 32,418 298,086

Accumulated depreciationBeginning of financial year 1,641 12,442 21,177 52,064 1,273 13,719 102,316Currency translation

differences – – – – 23 209 232Depreciation charge 211 2,019 2,177 8,457 388 2,987 16,239Reclassification (170) 170 – – – – –Disposals/Write-offs – – (16) (919) – (241) (1,176)End of financial year 1,682 14,631 23,338 59,602 1,684 16,674 117,611

Net book value at end of financial year 17,356 87,405 10,248 48,442 1,280 15,744 180,475


78



Furniture and office equipment

RM’000

MotorvehiclesRM’000

TotalRM’000

Company2016CostBeginning of financial year 172 740 912Currency translation differences 9 42 51Additions 342 – 342End of financial year 523 782 1,305

Accumulated depreciationBeginning of financial year 34 135 169Currency translation differences 2 8 10Depreciation charge 73 78 151End of financial year 109 221 330

Net book valueEnd of financial year 414 561 975

2015CostBeginning of financial year 51 679 730Currency translation differences 11 61 72Additions 132 – 132Disposals/Write-offs (22) – (22)End of financial year 172 740 912

Accumulated depreciationBeginning of financial year 39 56 95Currency translation differences 3 9 12Depreciation charge 8 70 78Disposals/Write-offs (16) – (16)End of financial year 34 135 169

Net book valueEnd of financial year 138 605 743

Annual Report 2016

79



(a) The net carrying amount of motor vehicles and medical equipment of the Group and Company held under finance leases are as follows:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Motor vehicles 1,109 931 561 605Medical equipment 14,521 25,583 – –

15,630 26,514 561 605

During the financial year, motor vehicles and medical equipment of the Group amounting to RM 4,076,000 (2015: RM 4,862,000) were acquired under finance leases (Note 19).

(b) Property, plant and equipment of certain subsidiaries with a net carrying amount of RM 14,329,000 (2015: RM 14,518,000) have been pledged to financial institutions for credit facilities granted to the Group (Note 18(a)).

(c) In 2015, the Group’s subsidiary, Mahkota Medical Centre Sdn. Bhd. (“MMCSB”) acquired property, plant and equipment of RM 35,045,000 and inventories of medical suites held for sale of RM 5,782,000 (Note 12) from its associated corporations, including Mahkota Commercial Sdn. Bhd. (“MCSB”) and its subsidiaries as part of an asset restructuring exercise to restore the Group’s ownership of certain hospital assets previously transferred to associated corporations. The additions of RM 38,849,000 in leasehold buildings in 2015 included the elimination of losses arising from these upstream transactions with the associated corporations amounting to RM 3,759,000 (Note 14(e)). RM 35,952,000 of the amounts due to associated corporations for the transaction remained outstanding in 2015. The outstanding amounts due to associated corporations have been fully repaid during the current financial year.

17. Trade and other payables

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CurrentTrade payables – third parties 27,993 27,731 39 –Deposits received 1,484 267 – –Directors’ fee payable 591 533 591 533Accrued employee compensation expense 11,164 9,985 892 862Accrued rental expense (a) 5,376 5,628 – –Other payables and accruals 22,348 19,626 1,350 1,924Dividend payable to non-controlling interests

of a subsidiary 10,210 – – –Amount due to associated corporations (non-

trade) (c) 52 2,351 – –Amount due to related parties (non-trade) (b) 81 88 81 88

79,299 66,209 2,953 3,407


80


17. Trade and other payables (continued)

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Non-currentAmount due to associated corporations (non-

trade) (c) – 33,600 – –Amount due to non-controlling interests of a

subsidiary (non-trade) (d) 18,251 19,247 – –18,251 52,847 – –

(a) Included in “trade and other payables” are lease expenses accrued on a straight-line basis for a non-cancellable operating lease with an associated corporation of RM 5,376,000 (2015: RM 5,628,000). Please refer to Note 25(b).

(b) The current amounts due to related parties are unsecured, interest-free and are repayable on demand. (c) The current and non-current non-trade amounts due to associated corporations arose from the asset restructuring

exercise (Note 16c) in the prior financial year and are unsecured. The balance had been fully repaid during the current financial year.

(d) The non-current non-trade amount due to non-controlling interests of a subsidiary is unsecured and interest-free.

18. Borrowings

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CurrentOverdraft (Note 10) - secured 4,602 241 – –Short-term bank loans – secured 16,979 19,607 13,319 12,607– unsecured 602 572 – –Loan from holding company – unsecured – 3,362 – 3,362Current portion of long-term bank loans– secured 559 552 – –Finance lease liabilities - secured (Note 19) 4,753 4,551 89 84

27,495 28,885 13,408 16,053

Annual Report 2016

81


18. Borrowings (continued)

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Non-currentLong-term bank loans– secured 4,984 5,584 – –– unsecured 680 559 – –Loan from holding company – unsecured 3,552 – 3,552 –Finance lease liabilities - secured (Note 19) 5,146 5,548 103 182

14,362 11,691 3,655 182

Total borrowings 41,857 40,576 17,063 16,235

The exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual repricing dates at the balance sheet date are as follows:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Less than one year 27,495 28,885 13,408 16,053Between one and five years 14,362 11,691 3,655 182

41,857 40,576 17,063 16,235

The weighted average effective interest rates at the balance sheet date are as follows:

Group Company2016 2015 2016 2015

% % % %

Overdraft 5.82 6.67 – –Short-term bank loans 4.17 4.65 3.81 4.01Long-term bank loans 6.81 6.86 – –Loan from holding company 6.00 6.00 6.00 6.00Finance lease liabilities 5.78 5.54 5.07 5.07


82


18. Borrowings (continued)

(a) Security granted

The short-term and long-term bank loans are secured by the following:

(i) The Company - A corporate guarantee from the holding company.

(ii) The Group – In addition to paragraph (i) above, a first assignment on land and buildings and assignment of rental proceeds of certain subsidiaries in Malaysia (Note 16(b)).

The finance lease liabilities of the Group and the Company are effectively secured as the rights to the hire purchase assets (Note 16(a)) revert to the hiree in the event of default.

(b) Maturity of borrowings

The non-current borrowings (excluding finance lease liabilities (Note 19)) has the following maturity:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Between two and five years 7,109 3,268 3,552 –Later than five years 2,107 2,875 – –

9,216 6,143 3,552 –

(c) Fair value of non-current borrowings The fair values of non-current borrowings approximate their carrying values.

(d) Undrawn borrowing facilities

The Group and the Company had the following undrawn borrowing facilities:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

– Expiring not later than one year 34,700 12,843 1,184 –– Expiring later than one year 2,975 2,977 – –

37,675 15,820 1,184 –

The borrowing facilities expiring within one year are annual facilities subject to review at various dates in 2016. The borrowing facilities were arranged to finance partially the Group’s working capital requirements.

Annual Report 2016

83


19. Finance lease liabilities

The Group and the Company lease certain plant and equipment, and motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the Group and the Company with options to purchase the leased assets at nominal values at the end of the lease term.

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Minimum lease payments due:– Not later than one year 5,155 4,964 99 94– Between two and five years 5,394 5,867 115 203

10,549 10,831 214 297Less: Future finance charges (650) (732) (22) (31)Present value of finance lease liabilities 9,899 10,099 192 266

The present values of finance lease liabilities are analysed as follows:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Not later than one year (Note 18) 4,753 4,551 89 84Later than one year (Note 18):– Between two and five years 5,146 5,548 103 182

9,899 10,099 192 266

20. Deferred income

This relates to fees receivable in advance in respect of healthcare education and training courses as follows:

Group2016 2015

RM’000 RM’000

Beginning of financial year 1,236 1,091Additions during the financial year 7,443 6,580Amount credited to profit or loss (6,686) (6,535)Currency translation differences 69 100End of financial year 2,062 1,236


84


21. Deferred income taxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheets as follows:

Group2016 2015

RM’000 RM’000

Deferred income tax assets:– to be recovered after one year (3,555) (9,040)

Deferred income tax liabilities:– to be settled after one year 5,479 4,736

The movement in the deferred income tax account is as follows:

Group2016 2015

RM’000 RM’000

Beginning of financial year (4,304) 1,083Tax charged/ (credited) to profit or loss (Note 8) 6,228 (5,387)End of financial year 1,924 (4,304)

The movement in deferred income tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) during the financial year were as follows:

Group

Deferred income tax liabilities

Acceleratedtax

depreciationRM’000

2016Beginning of financial year 8,534Charged to profit or loss 734End of financial year 9,268

2015Beginning of financial year 6,045Charged to profit or loss 2,489End of financial year 8,534

Annual Report 2016

85


21. Deferred income taxes (continued)

The Company has no deferred tax liabilities or assets as at 30 June 2016 and 2015.

Group

Deferred income tax assets

ProvisionsUnutilised tax

credits claimedUnutilised tax

losses TotalRM’000 RM’000 RM’000 RM’000

2016Beginning of financial year (2,347) – (10,491) (12,838)(Credited)/charged to profit or loss (763) – 6,257 5,494End of financial year (3,110) – (4,234) (7,344)

2015Beginning of financial year (1,231) (3,731) – (4,962)(Credited)/charged to profit or loss (1,116) 3,731 (10,491) (7,876)End of financial year (2,347) – (10,491) (12,838)

Deferred income tax assets are recognised for tax losses, capital allowances, provisions and unutilised tax credits claimed to the extent that realisation of the related tax benefits through future taxable profits is probable.

The Group has unrecognised tax losses of RM 26,757,000 (2015: RM 25,971,000) and provisions of RM 11,310,000 (2015: RM 9,128,000) at the balance sheet date which can be carried forward and used to offset against future taxable income.


86


22. Share capital

No. of ordinary shares Amount

Issued share capital

Treasury shares

Issued share capital

Treasury shares

RM’000 RM’000

2016Beginning of financial year 577,272,286 (201,000) 90,564 (47)Treasury shares purchased – (1,008,600) – (975)End of financial year 577,272,286 (1,209,600) 90,654 (1,022)

2015Beginning and end of financial year 577,272,286 (201,000) 90,564 (47)

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

(a) Treasury shares

The Company acquired 1,008,600 (2015: nil) shares in the Company in the open market during the financial year. The total amount paid to acquire the shares was RM 975,000 (2015: nil) and this is presented as a component within shareholders’ equity.

(b) HMI Employee Share Option Scheme

On 14 November 2014, options to subscribe for 3,780,000 ordinary shares in the Company at an exercise price of S$0.28 per ordinary share were granted to certain directors and other key management personnel under the HMI Employee Share Option Scheme (“HMI ESOS”), which was approved by shareholders on 23 October 2008.

The exercise price of the options is determined as the average of the closing prices of the Company’s ordinary shares as quoted on the Singapore Exchange for five market days immediately preceding the date of the grant. The vesting of the options is conditional on the directors and key management personnel completing one year of service to the Group from the date of the grant. Once they have vested, the options are exercisable immediately and will expire after a period of ten years from date of grant. The options granted are exercisable from 14 November 2015 and expire on 13 November 2024.

The fair value of the options granted was estimated to be S$386,000 (approximately RM 1,081,000), using the

Black-Scholes Option Pricing model. The significant inputs into the model were share price of S$0.28 at the grant date, exercise price of S$0.28, dividend yield of 0%, expected life of 5 years and annual risk-free interest rate of 1.49%. The volatility of 0.39 is measured as the standard deviation of continuously compounded daily returns over 5 years before grant date.

Annual Report 2016

87


22. Share capital (continued)

(b) HMI Employee Share Option Scheme (continued)

Movements in the number of unissued ordinary shares under the HMI ESOS and their exercise prices are as follows:

No. of ordinary shares under HMI ESOS

Beginningof financial

year

Granted during

financial year

Forfeited during

financial year

Exercised during

financialyear

End of financial

yearExercise

priceExercise period

Group and Company2016Options 3,780,000 – – – 3,780,000 S$0.28 14.11.2015 –

13.11.20243,780,000 – – – 3,780,000

2015Options – 3,780,000 – – 3,780,000 S$0.28 14.11.2015 –

13.11.2024– 3,780,000 – – 3,780,000

The options are fully vested but not exercised at the balance sheet date.

(c) HMI Performance Share Plan

On 14 November 2014, 8,820,000 awards, comprising of 8,820,000 shares, were granted to certain directors and other key management personnel under the HMI Performance Share Plan (“HMI PSP”), which was approved by shareholders on 23 October 2008.

The actual number of shares to be released could be zero or a maximum of 8,820,000, at nil exercise price, depending on the achievement of pre-determined performance targets.

The fair value of the awards granted was estimated to be S$2,470,000 (approximately RM 6,920,000) using the Black-Scholes Option Pricing model. The significant inputs into the model were share price of S$0.28 at the grant date, dividend yield of 0%, expected life of 2 years and annual risk-free interest rate of 0.48%. The volatility of 0.38 is measured as the standard deviation of continuously compounded daily returns over 2 years before grant date.

Movements in the number of shares awarded under the HMI PSP are as follows:

Group and Company2016 2015

Beginning of financial year 8,820,000 –Granted – 8,820,000End of financial year 8,820,000 8,820,000


88


23. Other reserves

(a) Currency translation reserve

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Beginning of financial year 9,114 5,860 16,296 8,180Net currency translation differences

of the Company and Singapore subsidiaries 3,307 3,260 5,630 8,116

Less: Non-controlling interests (4) (6) – –3,303 3,254 5,630 8,116

End of financial year 12,417 9,114 21,926 16,296

The currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of Singapore operations whose functional currencies are different from the presentation currency of the financial statements of the Group.

(b) Other reserves

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Composition:Capital reserve 68 68 16 16Share-based payment reserve 7,062 3,026 7,062 3,026

7,130 3,094 7,078 3,042

Movements:(i) Capital reserveBeginning and end of financial year 68 68 16 16

(ii) Share-based payment reserveBeginning of financial year 3,026 – 3,026 –Share-based payment reserve 4,036 3,026 4,036 3,026End of financial year 7,062 3,026 7,062 3,026

Other reserves are non-distributable.

Annual Report 2016

89


23. Other reserves (continued)

(c) Retained earnings/(accumulated losses)

(i) Retained earnings of the Group include the accumulated share of profits of associated corporations amounting to RM 28,729,000 (2015: RM 26,678,000).

(ii) Movement in accumulated losses for the Company is as follows:

Company2016 2015

RM’000 RM’000

Beginning of financial year (10,066) (2,410)Net profit/ (loss) 9,089 (7,656)End of financial year (977) (10,066)

24. Dividends

At the Annual General Meeting on 24 October 2016, a final one-tier tax-exempt cash dividend of 0.75 RM cents per ordinary share of the Company in respect of the financial year ended 30 June 2016 amounting to a total of RM 4,387,000 will be recommended. These financial statements do not reflect this dividend, which will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 30 June 2016.

25. Commitments

(a) Capital commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 7,959 8,621 – 145

(b) Operating lease commitments - where the Group is a lessee

The Group leases various land and office premises under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.


90


25. Commitments (continued)

(b) Operating lease commitments - where the Group is a lessee (continued)

The future aggregate minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows:

Group2016 2015

RM’000 RM’000

Not later than one year 7,177 7,458Between two and five years 23,781 25,208Later than five years 131,337 136,866

162,295 169,532Less: Accrual for operating lease expenses recognised

on a straight-line basis (Note 17) (5,376) (5,628)Operating lease commitments not recognised as liabilities

at balance sheet date 156,919 163,904

26. Contingent liabilities

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These bank borrowings amount to RM 7,213,000 (2015: RM 3,071,000) at the balance sheet date.

Annual Report 2016

91


27. Financial risk management

Financial risk factors

The Group’s activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group’s policy is not to engage in speculative transactions.

(a) Market risk

(i) Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in currency

exchange rates.

The Company’s operational activities are carried out in Singapore Dollars (“SGD”). The Group’s operational activities are substantially carried out in Malaysian Ringgit (“RM”) by its subsidiaries in Malaysia.

Management monitors the Group’s and Company’s exposure to currency risk to keep the net exposure at an acceptable level.

As at balance sheet date, the Group’s subsidiaries have their financial instruments mainly denominated in their respective functional currencies, and currency risk is insignificant. The Company’s exposure to currency risk mainly arises from RM denominated amount due from an associated corporation of RM 10,405,000 (2015: RM 23,247,000) and amount due from subsidiaries of RM 18,275,000 (2015: RM 19,472,000) as the Company’s functional currency is SGD.

As at 30 June 2016, if the RM has strengthened/ weakened by 1% (2015: 1%) against the SGD with all other variables including tax rate being held constant, the Group and Company’s profit after tax would have been RM 238,000 (2015: RM 335,000) higher/lower, as a result of currency translation gains/losses on these RM denominated balances.

(ii) Cash flow and fair value interest rate risk

Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to cash flow interest rate risks arises mainly from variable rate borrowings. The Group and Company manage its interest rate exposure by monitoring movements in interest rates and actively reviewing its borrowings.

The Group’s and Company’s borrowings at variable rates comprise approximately 68% (2015: 67%) and 78% (2015: 78%) of the total borrowings respectively. If the interest rate during the financial year had been higher/lower by 0.5% (2015: 0.5%) with all other variables including tax rates being held constant, the profit after tax for the Group and Company would have been lower/higher by RM 118,000 (2015: RM 113,000) and RM 55,000 (2015: RM 52,000) respectively as a result of higher/lower interest expense on variable rate borrowings.


92


27. Financial risk management (continued)

(b) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The major classes of financial assets of the Group and of the Company are bank deposits and trade and other receivables. For trade and other receivables, the Group adopts the policy of dealing only with customers and counterparties of appropriate credit history to mitigate credit risk. Bank deposits are mainly placed with financial institutions which have high credit ratings.

Trade and other receivables are monitored on an ongoing credit evaluation by the respective management and by Group management. The Group has no significant concentration exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.

Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers who are dispersed. Management believes that there is no anticipated additional credit risk beyond the amount of allowance for impairment made in the Group’s trade receivables.

As the Group and Company do not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet.

The Group’s dominant operations are in Malaysia, and the Group’s trade receivables located in Malaysia represents 89% (2015: 89%) of total trade receivables. The remainder represents revenues arising from operations in Singapore.

Trade receivables arise entirely from non-related parties: corporate customers and individual customers which represent 79% (2015: 76%) and 21% (2015: 24%) respectively.

It is the Group’s policy to transact with creditworthy counterparties. In addition, the granting of material credit limits to counterparties is reviewed and approved by senior management.

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group.

(ii) Financial assets that are either past due or impaired

Apart from other receivables and amounts due from an associated corporation (refer to Note 11) which are assessed for impairment on a case-by-case basis, there is no other class of financial assets that is past due and/or impaired except for trade receivables (refer below for analysis).

The age analysis of trade receivables past due but not impaired is as follows:

Group2016 2015

RM’000 RM’000

Past due 0 to 1 months 3,256 5,382Past due 1 to 3 months 1,641 8,241Past due over 3 months 7,300 4,821

12,197 18,444

At the Company level, all non-trade receivables are from subsidiaries and associated corporations and the carrying amounts are not past due.

Annual Report 2016

93



(b) Credit risk (continued)

(ii) Financial assets that are either past due or impaired (continued)

The carrying amount of trade receivables individually determined to be impaired and the movement of the related allowance for impairment is as follows:

Group2016 2015

RM’000 RM’000

Gross amount 10,031 7,248Less: Allowance for impairment (10,031) (7,248)

– –

Beginning of financial year 7,248 6,466Allowance made 3,515 1,738Allowance written back (69) (956)Allowance utilised (663) –End of financial year 10,031 7,248

The impaired trade receivables arise mainly from corporate and individual customers, and an allowance is made on a case-by-case basis.

(c) Liquidity risk

The Group and the Company manage liquidity risk by maintaining sufficient cash to enable them to meet their normal operating commitments and having an adequate amount of committed credit facilities.

The table below analyses the maturity profile of the financial liabilities of the Group and the Company based on contractual undiscounted cash flows.

Less than1 year

Between2 and 5 years

Over 5 years

RM’000 RM’000 RM’000

Group2016Trade and other payables 79,303 18,251 –Borrowings 28,800 13,739 2,340

108,103 31,990 2,340

2015Trade and other payables 68,803 26,472 36,060Borrowings 29,883 9,515 3,474

98,686 35,987 39,534


94



(c) Liquidity risk (continued)

Less than1 year

Between2 and 5 years

RM’000 RM’000

Company2016Trade and other payables 2,953 –Borrowings 13,916 3,869Financial guarantee 7,213 –

24,082 3,869

2015Trade and other payables 3,407 –Borrowings 16,358 182Financial guarantee 3,071 –

22,836 182

(d) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.

The Group and the Company are in compliance with all externally imposed capital requirements for the financial years ended 30 June 2016 and 2015.

(e) Financial instruments by category

The aggregate carrying amounts of loans and receivables and financial liabilities at amortised cost are as follows:

2016 2015RM’000 RM’000

GroupLoans and receivables 138,223 127,933Financial liabilities at amortised cost 139,407 159,632

CompanyLoans and receivables 58,656 48,281Financial liabilities at amortised cost 20,016 19,642

Annual Report 2016

95


28. Immediate and ultimate holding company

The Company’s immediate and ultimate holding company is Nam See Investment (Pte) Ltd., incorporated in Singapore.

29. Related party transactions

(a) In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and the related parties at terms agreed between the parties:

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(i) Rental expense to associated corporations*

– 6,788 – –

(ii) Interest income from associated corporations

(781) (958) (8) (7)

(iii) Payments on behalf of an associated corporation

421 1,901 – –

(iv) Agency fee paid to a related party# 129 119 129 119

(v) Agency fee recharged to subsidiaries – – (129) (119)

(vi) Management fee income from subsidiaries

– – (1,836) (1,404)

(vii) Salaries recharged to subsidiaries – – (427) (272)

(viii) Service fee income from subsidiaries – – (31) (30)

(ix) Interest expense charged by holding company

214 172 214 172

(x) Interest expense charged by associated corporations

1,510 682 – –

(xi) Healthcare training cost charged by a subsidiary

– – 1,439 –

* Rental expense to associated corporations is based on lease agreements.

# The related party refers to a company which is controlled by certain key management personnel of the Group and their close family members.


96


29. Related party transactions (continued)

(b) Key management personnel compensation

Key management personnel compensation is as follows:

Group2016 2015

RM’000 RM’000

Wages and salaries 9,050 6,771Employer’s contribution to defined contribution plans,

including Central Provident Fund 371 270Share-based payment expenses 4,036 3,026Benefits in kind 224 189

13,681 10,256

30. Segment information

The Management has determined the operating segments based on the reports that are used to make strategic decisions. The Management comprises the Executive Chairman/Managing Director, the Group Chief Executive Officer and the Executive Directors.

The Management assesses the performance of the operating segments based on a measure of earnings before interest and tax (“adjusted EBIT”).

The Management considers the business from both a geographic and business segment perspective. Geographically, management manages and monitors the business in the two primary geographic areas, Singapore and Malaysia. The Singapore segment derives revenue from healthcare education and training services. The Malaysia segment derives revenue from hospital and other healthcare services.

Other operations included within Singapore and Malaysia relate to investment holding.

Annual Report 2016

97


30. Segment information (continued)

The segment information provided to the Management for the reportable segments are as follows:

Malaysia SingaporeMalaysia & Singapore

Hospital and other- healthcareservices

Healthcare education

and trainingInvestment

holding Total RM’000 RM’000 RM’000 RM’000

2016

Revenue:Total segment revenue 394,311 11,061 25,326 430,698Inter-segment revenue (6,123) (1,439) (25,326) (32,888)Revenue to external parties 388,188 9,622 – 397,810

Adjusted EBIT 78,130 (455) (14,410) 63,265Interest expense - net (1,234) (63) (637) (1,934)Share of profit of associated corporations 2,051 – – 2,051Profit before income tax 78,947 (518) (15,047) 63,382

Depreciation expense 17,563 592 151 18,306

Segment assets 344,811 8,781 29,294 382,886Segment assets includes:Investment in associated corporations 46,355 – – 46,355Additions to:– property, plant and equipment 12,586 2,963 342 15,891

Segment liabilities 107,092 5,250 38,279 150,621


98



Malaysia SingaporeMalaysia & Singapore

Hospital and other- healthcareservices

Healthcare education

and trainingInvestment

holding Total RM’000 RM’000 RM’000 RM’000

2015

Revenue:Total segment revenue 347,869 8,468 5,959 362,296Inter-segment revenue (11,113) – (5,959) (17,072)Revenue to external parties 336,756 8,468 – 345,224

Adjusted EBIT 61,615 1,656 (9,978) 53,293Interest expense - net (970) – (694) (1,664)Share of profit of associated corporations 3,134 – – 3,134Profit before income tax 63,779 1,656 (10,672) 54,763

Depreciation expense 15,645 516 78 16,239

Segment assets 337,808 6,879 27,079 371,766Segment assets includes:Investment in associated corporations 37,990 – – 37,990Additions to:– property, plant and equipment 54,192 24 132 54,348

Segment liabilities 125,155 2,584 38,898 166,637

The revenue from external parties reported to the Management is measured in a manner consistent with that in the statement of comprehensive income.

Annual Report 2016

99



(a) Reconciliations

(i) Segment profits

A reconciliation of adjusted EBIT to profit before tax is as follows:

Group2016 2015

RM’000 RM’000

Adjusted EBIT for reportable segments 63,265 37,054Finance expense (3,637) (3,354)Interest income 1,703 1,690Unallocated: Share of profit of associated corporations 2,051 3,134

Profit before tax 63,382 54,763

(ii) Segment liabilities

The amounts provided to the management with respect to total liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment. All liabilities are allocated to the reportable segments.

Group2016 2015

RM’000 RM’000

Segment liabilities for reportable segments 150,621 166,637150,621 166,637

(b) Revenue from major products and services

Revenue from external customers are derived from hospital and other healthcare services and healthcare education and training as follows:

Group2016 2015

RM’000 RM’000

Hospital and other healthcare services 388,188 336,756Healthcare education and training 9,622 8,468

397,810 345,224


100



(c) Geographical information

The Group’s two business segments operate in two main geographical areas:

(i) Singapore – the Company is headquartered and has operations in Singapore. The operations in this area are healthcare education and training.

(ii) Malaysia – the operations in this area are hospital and other healthcare services.

Total sales2016 2015

RM’000 RM’000

Singapore 9,639 8,486Malaysia 388,171 336,738

397,810 345,224

Total non-current assets2016 2015

RM’000 RM’000

Singapore 50,984 39,249Malaysia 177,350 188,772

228,334 228,021

31. Events occurring after balance sheet date

On 26 August 2016, the directors approved the allotment of 8,820,000 new ordinary shares pursuant to the achievement of the prescribed performance targets under the HMI Performance Share Plan.

32. New or revised accounting standards and interpretations

Below are the mandatory standards, amendments and interpretations to existing standards that have been published, and are relevant for the Group’s accounting periods beginning on or after 1 July 2016 or later periods and which the Group has not early adopted:

• FRS 115 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2017)

FRS 115 was issued in November 2015 and supersedes FRS 18 Revenue, FRS 11 Construction contracts and other revenue related interpretations. It applies to all contracts with customers, except for leases, financial instruments and insurance contracts. FRS 115 provides a single, principle-based model to be applied to all contracts with customers. It provides guidance on whether revenue should be recognised at a point in time or over time, replacing the previous distinction between goods and services. The standard introduces new guidance on specific circumstances where cost should be capitalised and new requirements for disclosure of revenue in the financial statements.

• FRS 109 Financial Instruments (effective for annual periods beginning on or after 1 January 2018.)

FRS 109 was issued in December 2015 and includes guidance on the classification and measurement of financial assets and financial liabilities and de-recognition of financial instruments.

Annual Report 2016

101


32. New or revised accounting standards and interpretations (continued)

• FRS 116 Leases (effective for annual periods beginning on or after 1 January 2019)

FRS 116 requires lessees to recognise nearly all leases on the balance sheet which will reflect their right to use an asset for a period of time and the associated liability for payments. As such, lessees has to recognise a right- of-use asset and a lease liability for almost all lease contracts. The only exemptions are for short-term leases with lease term of 12 months or less and low-value leases. Lessor accounting model substantially stays the same except for the enhanced disclosure requirements for both lessor and lessees aiming to reflect a more relevant picture of every companies’ leasing arrangements.

The Group is in the midst of assessing the impact of the adoption of these mandatory standards that have been published to the financial statements.

33. Listing of companies in the Group

Name of companies Principal activities

Country of business/

incorporationEquity

holding*2016 2015

% %

Subsidiaries (held by the Company)

HMI Institute of Health Sciences Pte. Ltd. (a)

Healthcare education and training Singapore 100 100

HMI Health Management (M) Sdn. Bhd.(b)

Hospital management services Malaysia 100 100

Mahkota Medical Centre Sdn. Bhd. (“MMCSB”) (b) (e)

Hospital and healthcare services Malaysia 48.95 48.95

Mahkota Medical Group Sdn. Bhd. (“MMGSB”) (b) (f)

Investment holding Malaysia 48.95 48.95

Regency Specialist Hospital Sdn. Bhd. (“RSHSB”) (b) (g)

Hospital and healthcare services Malaysia 29 29

Held by MMCSB (48.95% held by the Company)

Mahkota Realty Sdn. Bhd. (b) Dormant Malaysia 75 75

Mahkota Land Sdn. Bhd. (b) Property investment Malaysia 75 75

PT. Mahkota Healthcare Services (b) Hospital management and consulting services

Indonesia 95 95

Held by MMGSB (48.95% held by the Company)

Regency Specialist Hospital Sdn. Bhd. (“RSHSB”) (b) (g)

Hospital and healthcare services Malaysia 65 65

Held by RSHSB (60.82%% held by the Company)

Regency Specialist Hospital (S) Pte. Ltd. (a)

Hospital management and consulting services

Singapore 100 100


102


33. Listing of companies in the Group (continued)

Name of companies Principal activities

Country of business/

incorporationEquity

holding*2016 2015

% %

Associated corporations (held by the Company)

Nathill Track (M) Sdn. Bhd.(c) Dormant Malaysia 30 30

Mahkota Commercial Sdn. Bhd. (“MCSB”) (d)

Holding company of investment properties

Malaysia 48.95 48.95

Regency Healthcare Sdn. Bhd. (“RHSB”) (d)

Dormant Malaysia 35 35

Regency Medical Centre (Seri Alam) Sdn. Bhd. (d)

Development and lease of a hospital building

Malaysia 29 29

Panodahlia Sdn. Bhd. (b) (h) Healthcare education and training Malaysia 43.45 43.45

Silver Uptown Sdn. Bhd. (i) Investment holding Malaysia 48.95 50

Held by MCSB (48.95% held by the Company)

Mahkota Realty Sdn. Bhd. (b) Dormant Malaysia 25 25

Raspuri Sdn. Bhd. (d) Dormant Malaysia 100 100

Mahkota Land Sdn. Bhd. (b) Property investment Malaysia 25 25

Pancastle Sdn. Bhd. (d) Dormant Malaysia 100 100

Regency Healthcare Sdn. Bhd. (“RHSB”)(d)


Regency Medical Centre (Seri Alam) Sdn. Bhd. (d)

Development and lease of a hospital building

Malaysia 65 65

Held by RHSB (66.82% held by the Company)

Regency Medical Centre Sungai Petani) Sdn. Bhd. (d)


(a) Audited by PricewaterhouseCoopers LLP, Singapore(b) Audited by PricewaterhouseCoopers, Malaysia(c) Audited by BKR Peter Chong, Malaysia(d) Audited by Crowe Horwath, Malaysia(e) Although the Company holds 48.95% equity interest in MMCSB, pursuant to an agreement signed by the shareholders of MMCSB

on 21 September 2002, the Company exercises control over the Board of Directors, by having the power to cast majority votes at meetings of the Board of Directors, and accordingly considers MMCSB as a subsidiary.

(f) Although the Company holds 48.95% equity interest in MMGSB, pursuant to an agreement signed by the shareholders of MMGSB on 22 October 2008, the Company exercises control over the Board of Directors by, having the power to cast majority votes at meetings of the Board of Directors, and accordingly considers MMGSB as a subsidiary.

Annual Report 2016

103


33. Listing of companies in the Group (continued)

(g) The Company controls directly and indirectly interest of 29% and 31.82% respectively and accordingly considers RSHSB a subsidiary.(h) The Company operates Mahkota Institute of Health Sciences and Nursing.(i) The Company acquired 50% of the issued and paid-up capital of Silver Uptown Sdn. Bhd. (“SUSB”) on 12 June 2015, and subsequently

subscribed 48,947 ordinary shares, representing 48.95% of the enlarged issued and paid-up capital of SUSB on 16 November 2015. * Equity holding refers to the equity holding by the respective entity referred above.

34. Authorisation of financial statements

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of Health Management International Ltd on 21 September 2016.


104

supplementary information

(A) Leasehold land and leasehold buildings of the Group as set out in Note 16 to the financial statements held by subsidaries include the following:-

Location DescriptionGross Floor Area (Sq ft) Tenure

Group’s effective interest in the

property

Held by Mahkota Medical Centre Sdn Bhd (“MMCSB”)

No. 3 Mahkota Melaka, Jalan Merdeka, 75000 Melaka (a)

Basement, Ground Floor, 1st, 2nd, 3rd, 5th and 6th floor of Mahkota Medical Centre for facilities support, road infrastructure and hospital use; Medical suites, administration office and nursing college at 2nd, 3rd, 4th and 9th floor of Mahkota Medical Centre; Patient wards at 7th and 8th floor of Mahkota Medical Centre

251,359 99 years commencing from 19 July 2002

48.95%

Lot 1349, Kawasan Bandar XLII, Melaka Tengah, Melaka (a)

Car park 46,812 95 years commencing from 16 November 2007

48.95%

Lot 1344, Kawasan Bandar XLII, Melaka Tengah, Melaka (a)

Car park 115,884 99 years commencing from 19 July 2002

48.95%

Annual Report 2016

105

(B) Land and buildings of the Group held by associated corporations include the following:-

Location DescriptionGross Floor Area (Sq ft) Tenure

Group’s effective interest in the

property

Held by Mahkota Commercial Sdn Bhd (“MCSB”)

No. 3 Mahkota Melaka, Jalan Merdeka, 75000 Melaka (a)

Medical suite at 4th floor of Mahkota Medical Centre

344 99 years commencing from 19 July 2002

48.95%

Held by Regency Medical Centre (Seri Alam) Sdn Bhd (subsidiary of MCSB)

HS(D) 239043, PTD 111517, Mukim Plentong, Daerah Johor Bahru, Negeri Johor (b)

Hospital building and land 413,613 Freehold 60.82%

(a) Valuation performed by Henry Butcher Malaysia (Malacca) Sdn Bhd

(b) Valuation performed by KGV International Property Consultants (Johor) Sdn Bhd

supplementary information


106

statistiCs of sHareHoldinGsas at 19 september 2016

Class of shares : Ordinary sharesVoting rights : One vote for each ordinary shareNumber of issued shares : 586,092,286Number of issued shares excluding treasury shares : 584,882,686Number of treasury shares : 1,209,600 (0.21%)

Distribution of Shareholdings as at 19 September 2016

Size of Shareholdings No. of Shareholders % No. of Shares %

1 – 99 81 1.97 2,986 0.00100 – 1,000 1,493 36.29 1,416,089 0.241,001 – 10,000 1,375 33.42 6,376,572 1.0910,001 – 1,000,000 1,117 27.15 73,669,460 12.601,000,001 and above 48 1.17 503,417,579 86.07Total 4,114 100.00 584,882,686 100.00

Twenty Largest Shareholders as at 19 September 2016

No. Name of Shareholders No. of Shares %

1 Nam See Investment (Pte) Ltd. 279,883,673 47.852 Raffles Nominees (Pte) Limited 48,217,188 8.243 Cheah Way Mun 16,422,602 2.814 DBS Nominees (Private) Limited 14,877,682 2.545 Beh Chun Chuan 10,210,800 1.756 HSBC (Singapore) Nominees Pte Ltd 10,168,759 1.747 Gan See Khem 8,692,600 1.498 Tan Han Shing Richard 7,824,325 1.349 OCBC Securities Private Limited 6,883,387 1.1810 Kaka Singh S/O Dalip Singh 6,436,168 1.1011 Phillip Securities Pte Ltd 6,126,233 1.0512 Allplus Holdings Pte Ltd 6,000,150 1.0313 Ching Kwok Choy 4,565,483 0.7814 United Overseas Bank Nominees (Private) Limited 4,474,814 0.7715 Maybank Kim Eng Securities Pte. Ltd. 4,102,834 0.7016 Chin Wei Jia 3,528,000 0.6017 Ng Chee Fatt 3,450,000 0.5918 Chern Chian (Chen Qian) 3,300,000 0.5619 UOB Kay Hian Private Limited 3,253,123 0.5620 Coffee Express 2000 Pte Ltd 3,039,800 0.52

Total 451,457,621 77.20

Annual Report 2016

107

statistiCs of sHareHoldinGsas at 19 september 2016

Direct Interest and Deemed Interest of Substantial Shareholders as at 19 September 2016

Name of Substantial ShareholdersRegistered in the name of the

substantial shareholders

Shareholdings in which substantial shareholders are

deemed to have an interest

Nam See Investment (Pte) Ltd. 280,747,973 –Dr Gan See Khem 8,692,600 295,889,495(a)

Dr Chin Koy Nam 3,288,000 301,294,095(b)

Kabouter Management, LLC – 48,881,965(c)

Note:

(a) Dr Gan See Khem is deemed to have interest in shares held by Nam See Investment (Pte) Ltd., her spouse and her children.

(b) Dr Chin Koy Nam is deemed to have interest in shares held by Nam See Investment (Pte) Ltd., his spouse and his children.

(c) Kabouter Management, LLC is deemed to be interested in the shares of Health Management International Ltd which are held through funds managed by Kabouter Management, LLC.

Percentage of Shareholdings held in the Public Hands as at 19 September 2016

Based on the information available to the Company as at 19 September 2016, there are approximately 36.31% of the total number of issued shares excluding treasury shares of the Company held in the hands of the public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited which requires at least 10% of the total number of issued shares excluding treasury shares (excluding preference shares and convertible equity securities) in a class that is listed at all times held by the public.


108

NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of Health Management International Ltd (the “Company”) will be held at Hall 2, Level 1, Devan Nair Institute for Employment and Employability, 80 Jurong East Street 21, Singapore 609607 on Monday, 24 October 2016 at 4.00 p.m. to transact the following business:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Statement and Audited Financial Statements of the Company for the financial year ended 30 June 2016 together with the Auditor’s Report thereon. [Resolution 1]

2. To re-elect Professor Tan Chin Tiong (“Prof Tan”), retiring by rotation pursuant to Article 95 of the Constitution of the Company and who, being eligible, offers himself for re-election. [Resolution 2]

Prof Tan, if re-elected, will remain as a Chairman of Nominating Committee and Remuneration Committee of the Company and a member of the Audit and Risk Management Committee of the Company. Prof Tan is considered as an Independent Non-Executive Director of the Company.

3. To re-elect Mr Chin Wei Yao, retiring pursuant to Article 96 of the Constitution of the Company and who, being eligible, offers himself for re-election. [Resolution 3]

4. To re-elect Professor Annie Koh (“Prof Koh”), retiring pursuant to Article 96 of the Constitution of the Company and who, being eligible, offers herself for re-election. [Resolution 4]

Prof Koh, if re-elected, will remain as a Chairman of Audit and Risk Management Committee of the Company and a member of Nominating Committee and Remuneration Committee of the Company. Prof Koh is also the Lead Independent Director of the Company.

5. To approve the payment of Directors’ Fees of S$199,655 to the Independent Non-Executive Directors of the Company for the financial year ended 30 June 2016 (2015: S$190,149). [Resolution 5]

6. To approve the final one-tier tax-exempt cash dividend of 0.75 RM cents per ordinary share of the Company for the financial year ended 30 June 2016. [Resolution 6]

7. To re-appoint Messrs PricewaterhouseCoopers LLP as the Auditor of the Company and to authorise the Directors of the Company to fix their remuneration. [Resolution 7]

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions and Special Resolution (for item 11 only), with or without any modifications:

8. Authority to issue shares in the capital of the Company [Resolution 8]

THAT pursuant to Section 161 of the Companies Act, Chapter 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the authority be and is hereby given to the Directors of the Company to:

(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or (ii) make or grant of offers, agreements or options (collectively, the “instruments”) that might or would require

shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and

notiCe of annual General meetinG

Annual Report 2016

109

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any instrument made or granted by the Directors of the Company while this Resolution was in force,

provided that:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of instruments made or granted pursuant to this Resolution) shall not exceed fifty per cent (50%) of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in paragraph (2) below), of which the aggregate number of shares (including shares to be issued in pursuance of instruments made or granted pursuant to this Resolution) to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty per cent (20%) of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with paragraph (2) below);

(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under paragraph (1) above, the total number of issued shares excluding treasury shares shall be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this Resolution is passed, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities;

(ii) new shares arising from exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and

(iii) any subsequent bonus issue, consolidation or subdivision of shares;

(c) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Constitution for the time being of the Company; and

(d) unless revoked or varied by the Company in a general meeting, the authority conferred by this Resolution shall continue in force (i) until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued in pursuance of the instruments, made or granted to this Resolution, until the issuance of such shares in accordance with the terms of the instruments.

[See Explanatory Note (i)]

9. Authority to issue shares under the HMI Employee Share Option Scheme and the HMI Performance Share Plan [Resolution 9]

THAT pursuant to Section 161 of the Companies Act, Chapter 50, the Directors of the Company be and are hereby empowered to offer and grant options under the HMI Employee Share Option Scheme (the “Scheme”) and share awards under the HMI Performance Share Plan (the “Plan”); and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, and the vesting of share awards under the Plan, granted during the subsistence of this authority, provided always that the aggregate total number of issued shares to be issued pursuant to the Scheme and the Plan shall not exceed fifteen per cent (15%) of the total number of issued shares in the capital of the Company excluding treasury shares from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.

[See Explanatory Note (ii)]



110

10. The Proposed Renewal of the Share Buy Back Mandate [Resolution 10]

THAT:

(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 (the “Companies Act”), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued ordinary shares in the capital of the Company (“Ordinary Shares”) not exceeding in aggregate the Maximum Percentage (as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) market purchase(s) on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) and/or any other stock exchange on which the Ordinary Shares may for the time be listed and quoted (the “Other Exchange”); and/or

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST or, as the case may be, the Other Exchange) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST or, as the case may be, the Other Exchange as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Buy Back Mandate”);

(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buy Back Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earlier of:

(i) the date on which the next Annual General Meeting of the Company is held;

(ii) the date by which the next Annual General Meeting of the Company is required by law to be held;

(iii) the date on which purchase and acquisitions of Ordinary Shares pursuant to the Share Buy Back Mandate are carried out to the full extent mandated;

(c) in this Resolution:

“Average Closing Price” means the average of the closing market prices of an Ordinary Share over the last five market days on which transactions in the Ordinary Shares on the SGX-ST or, as the case may be, the Other Exchange were recorded, immediately preceding the date of the market purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the off-market purchase, and deemed to be adjusted, in accordance with the listing rules of the SGX-ST, for any corporate action that occurs after the relevant five-day period;

“date of the making of the offer” means the date on which the Company announces its intention to make an offer for the purchase or acquisition of Ordinary Shares from Shareholders, stating therein the purchase price (which shall not be more than the Maximum Price calculated on the basis set out below) for each Ordinary Share and the relevant terms of the equal access scheme for effecting the off-market purchase;

“Maximum Percentage” means that number of issued Ordinary Shares representing 10% of the issued Ordinary Shares of the Company as at the date of the passing of this Resolution (excluding any Ordinary Shares which are held as treasury shares as at that date); and

“Maximum Price” in relation to an Ordinary Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and other related expenses) which shall not exceed:


Annual Report 2016

111

(i) in the case of a market purchase of an Ordinary Share, 105% of the Average Closing Price of the Ordinary Shares; and

(ii) in the case of an off-market purchase of an Ordinary Share, 120% of the Average Closing Price of the Ordinary Shares; and

(d) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this Resolution.

[See Explanatory Note (iii)]

11. The Proposed Alteration to the Constitution of the Company Relating to the HMI Scrip Dividend Scheme [Resolution 11]

THAT the Constitution of the Company be altered in the manner as set out in Appendix 1 to the Company’s Letters to Shareholders dated 30 September 2016 (the “Circular”).

12. The Proposed Authority to Issue New Ordinary Shares pursuant to the HMI Scrip Dividend Scheme [Resolution 12]

THAT, contingent upon the passing of Resolution 11 above, the Directors of the Company be and are hereby authorised, pursuant to Section 161 of the Companies Act, to allot and issue from time to time such number of new ordinary shares in the Company as may be required to be allotted and issued pursuant to the HMI Scrip Dividend Scheme (as defined in the Circular).

NOTICE OF BOOKS CLOSURE DATE AND PAYMENT DATE FOR FINAL ONE-TIER TAX-EXEMPT DIVIDEND

NOTICE IS HEREBY GIVEN that subject to shareholders’ approval being obtained at the Eighteenth Annual General Meeting of the Company to be held on 24 October 2016:

1. A final one-tier tax-exempt cash dividend of 0.75 RM cents per ordinary share of the Company in respect of the financial year ended 30 June 2016 will be paid on 11 November 2016 (“Proposed Final Dividend”).

2. The Share Transfer Books and Register of Members of the Company will be closed on 3 November 2016 for the preparation of payment for the Proposed Final Dividend.

Duly completed registrable transfers in respect of ordinary shares in the capital of the Company (“Shares”) received by the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 up to 5:00 p.m. on 2 November 2016 will be registered to determine shareholders’ entitlement to the Proposed Final Dividend.

Shareholders whose securities accounts maintained with The Central Depository (Pte) Limited are credited with Shares at 5:00 p.m. on 2 November 2016 will be entitled to the Proposed Final Dividend.

By Order of the Board

Ms Noraini Binte Noor Mohamed Abdul LatiffCompany SecretarySingapore30 September 2016



112

EXPLANATORY NOTES

(i) The Resolution 8 in item 8 above, if passed, will authorise the Directors of the Company, from the date of this Annual General Meeting of the Company until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held, or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding fifty per cent (50%) the total number of issued shares in the capital of the Company excluding treasury shares, of which the total number of issued shares to be issued other than on a pro rata basis, up to a number not exceeding twenty per cent (20%) of the total number of issued shares in the capital of the Company excluding treasury shares.

For the purpose of determining the aggregate number of shares that may be issued, the total number of issued shares excluding treasury shares shall be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this Resolution 8 is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities; (b) new shares arising from exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Resolution 8 is passed; and (c) any subsequent bonus issue, consolidation or subdivision of shares.

(ii) The Resolution 9 in item 9 above, if passed, will empower the Directors of the Company, from the date of this Annual General Meeting of the Company until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held, or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the capital of the Company pursuant to the exercise of options granted or to be granted under the Scheme and the vesting of share awards granted or to be granted under the Plan up to a number not exceeding in total (for the entire duration of the Scheme and the Plan) fifteen (15%) per cent of the total number of issued shares in the capital of the Company excluding treasury shares from time to time.

(iii) The Resolution 10 in item 10 above, if passed, will authorise the Directors of the Company, from the date of this Annual General Meeting of the Company until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held, or the date on which the share buy backs are carried out to the full extent mandated, or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to purchase or otherwise acquire ordinary shares in the capital of the Company not exceeding in aggregate the ten (10%) per cent of the issued ordinary share capital of the Company excluding any treasury shares at such price up to the Maximum Price (as defined above) as at the date of the passing of this Resolution 10. The details of the proposed renewal of the share buy back mandate are set out in the Letters to the Company’s Shareholders dated 30 September 2016 accompanying this annual report.

NOTES

1. (a) A member of the Company (otherwise than a relevant intermediary) is entitled to appoint not more than two (2) proxies to attend, speak and vote at the Annual General Meeting of the Company. Where such member appoints more than one proxy, the number of shares to be represented by each proxy shall be specified in the instrument appointing a proxy or proxies.

(b) A member of the Company who is a relevant intermediary is entitled to appoint more than two (2) proxies to attend, speak and vote at the Annual General Meeting of the Company, but each proxy must be appointed to exercise the rights attached to a different share or shares held by him (which number and class of shares shall be specified) and specified in the instrument appointing a proxy or proxies.


Annual Report 2016

113

“Relevant intermediary” means:

(i) a banking corporation licensed under the Banking Act, Chapter 19 of Singapore, or a wholly-owned subsidiary of such a banking corporation, whose business includes the provision of nominee services and who holds shares in that capacity;

(ii) a person holding a capital markets services licence to provide custodial services for securities under the Securities and Futures Act, Chapter 289 of Singapore, and who holds shares in that capacity; or

(iii) the Central Provident Fund Board established by the Central Provident Fund Act, Chapter 36 of Singapore, in respect of shares purchased under the subsidiary legislation made under the Central Provident Fund Act providing for the making of investments from the contributions and interest standing to the credit of members of the Central Provident Fund, if the Central Provident Fund Board holds those shares in the capacity of an intermediary pursuant to or in accordance with that subsidiary legislation.

2. A proxy need not be a Member of the Company.

3. If the appointor is a corporation, the instrument appointing a proxy or proxies must be executed either under its common seal or signed under the hand of its attorney or officer duly authorised on behalf of the corporation.

4. The instrument appointing a proxy or proxies, duly executed, must be deposited at the registered office of the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 not less than forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting of the Company.

PERSONAL DATA PRIVACY

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting of the Company and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents or service providers) for the purpose of the processing and administration by the Company (or its agents or service providers) of proxies and representatives appointed for the Annual General Meeting of the Company (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Annual General Meeting of the Company (including any adjournment thereof), and in order for the Company (or its agents or service providers) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents or service providers) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.


114

This page has been intentionally left blank.

HEALTH MANAGEMENT INTERNATIONAL LTD(Company Registration No.: 199805241E) (Incorporated in the Republic of Singapore)

IMPORTANT:1. Relevant intermediaries as defined in Section 181 of the Companies

Act, Chapter 50 of Singapore, may appoint more than two (2) proxies to attend, speak and vote at the Annual General Meeting of the Company.

2. For CPF/SRS investors who have used their CPF monies to buy Health Management International Ltd’s shares, this proxy form is not valid for use and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF/SRS investors should contact their CPF Approved Nominees if they have any queries regarding their appointment as proxies (Please see Note 3).

3. By submitting an instrument appointing a proxy(ies) and/or representative(s), a member accepts and agrees to the personal data privacy terms set out in the Notice of Annual General Meeting dated 30 September 2016.

PROXY FORM(Please see notes overleaf before completing this Proxy Form)

I/We (Name) (NRIC/Passport/UEN No.)

of (Address) being a member/members of Health Management International Ltd (the “Company”), hereby appoint:

Name NRIC/Passport No. No. of Shares Represented

Address

and/or (delete as appropriate)

Name NRIC/Passport No. No. of Shares Represented

Address

or failing him/her, the Chairman of the Annual General Meeting of the Company as my/our proxy/proxies to vote for me/us on my/our behalf at the Eighteenth Annual General Meeting of the Company to be held at Hall 2, Level 1, Devan Nair Institute for Employment and Employability, 80 Jurong East Street 21, Singapore 609607 on Monday, 24 October 2016 at 4.00 p.m. and any adjournment thereof.

I/We direct my/our proxies to vote for or against the Resolutions to be proposed at the Eighteenth Annual General Meeting of the Company as indicated hereunder. If no specific directions as to voting is given, the proxy/proxies may vote or abstain from voting at his/their discretion.

Resolutions

Numberof votes

For*

Number of votes Against*

ORDINARY RESOLUTION 1: Adoption of Audited Financial Statements for the financial year ended 30 June 2016 and Directors’ Statement together with Auditor’s Report thereonORDINARY RESOLUTION 2: Re-election of Professor Tan Chin Tiong, retiring pursuant to Article 95 of the Constitution of the Company, as a Director of the Company ORDINARY RESOLUTION 3: Re-election of Mr Chin Wei Yao, retiring pursuant to Article 96 of the Constitution of the Company, as a Director of the CompanyORDINARY RESOLUTION 4: Re-election of Professor Annie Koh, retiring pursuant to Article 96 of the Constitution of the Company, as a Director of the CompanyORDINARY RESOLUTION 5: Payment of Directors’ Fees of S$199,655 to the Independent Non-Executive Directors of the Company for the financial year ended 30 June 2016 ORDINARY RESOLUTION 6: Approval of the final one-tier tax-exempt cash dividend of 0.75 RM cents per ordinary share of the Company for the financial year ended 30 June 2016ORDINARY RESOLUTION 7: Re-appointment of Messrs PricewaterhouseCoopers LLP as the Auditor of the Company and the Directors of the Company be authorised to fix their remuneration.ORDINARY RESOLUTION 8: Authority to issue shares in the capital of the Company ORDINARY RESOLUTION 9: Authority to issue shares under the HMI Employee Share Option Scheme and the HMI Performance Share PlanORDINARY RESOLUTION 10: The Proposed Renewal of the Share Buy Back MandateSPECIAL RESOLUTION 11: The Proposed Alteration to the Constitution of the Company relating to the HMI Scrip Dividend SchemeORDINARY RESOLUTION 12: The Proposed Authority to issue of new Shares pursuant to the HMI Scrip Dividend Scheme

* If you wish to use all your votes “For” or “Against”, please indicate with an “X” within the box provided. Otherwise, please indicate number of votes “For” or “Against” for each Resolution within the box provided.

Dated this day of 2016.

Total number of shares held

Signature of Member(s) or Common Seal of Corporation

IMPORTANT: PLEASE READ NOTES OVERLEAF#

FOLD HERE FOR SEALING

Please affix

postage stamp here

BOARDROOM CORPORATE & ADVISORY SERVICES PTE. LTD. Share Registrar of

Health Management International Ltd50 Raffles Place

#32-01 Singapore Land TowerSingapore 048623

FOLD HERE

NOTES TO PROXY FORM:

1. If the member has shares entered against his name in the Depository Register (maintained by The Central Depository (Pte) Limited), he should insert that number of shares. If the member has shares registered in his name in the Register of Members (maintained by or on behalf of the Company), he should insert that number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by the member.

2. (a) A member of the Company (otherwise than a relevant intermediary) is entitled to appoint not more than two (2) proxies to attend, speak and vote at the general meeting. Where such member appoints more than one (1) proxy, the number of shares to be represented by each proxy shall be specified in the instrument appointing a proxy or proxies.

(b) A member of the Company who is a relevant intermediary is entitled to appoint more than two (2) proxies to attend, speak and vote at the general meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by him (which number and class of shares shall be specified) and specified in the instrument appointing a proxy or proxies.

“Relevant intermediary” means:

(i) a banking corporation licensed under the Banking Act, Chapter 19 of Singapore, or a wholly-owned subsidiary of such a banking corporation, whose business includes the provision of nominee services and who holds shares in that capacity;

(ii) a person holding a capital markets services licence to provide custodial services for securities under the Securities and Futures Act, Chapter 289 of Singapore, and who holds shares in that capacity; or

(iii) the Central Provident Fund Board established by the Central Provident Fund Act, Chapter 36 of Singapore, in respect of shares purchased under the

subsidiary legislation made under the Central Provident Fund Act providing for the making of investments from the contributions and interest standing to the credit of members of the Central Provident Fund, if the Central Provident Fund Board holds those shares in the capacity of an intermediary pursuant to or in accordance with that subsidiary legislation.

3. CPF/SRS investors whose names have been given by their CPF Approved Nominees to the Company or the Company’s share registrar, as the case may be, pursuant to a blanket instrument appointing proxy or proxies may attend and vote in person at the general meeting. In the event that such CPF/SRS investors are unable to attend the general meeting but would like to vote, they should inform their CPF Approved Nominees to appoint the Chairman of the meeting to act as their proxy.

4. A proxy need not be a member of the Company.

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company’s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 not less than forty-eight hours (48 hours) before the time appointed for the holding of general meeting.

6. Completion and return of this instrument appointing a proxy or proxies shall not preclude a member from attending and voting at the general meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the general meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy or proxies, to the general meeting.

7. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer on behalf of the corporation.

8. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument appointing a proxy or proxies, failing which the instrument may be treated as invalid.

9. A corporation which is a member of the Company may also authorize by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the general meeting in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

10. The Company shall be entitled to reject an instrument appointing a proxy or proxies which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument (including any related attachment).

11. In the case of a member whose shares are entered in the Depository Register, the Company may reject an instrument appointing a proxy or proxies if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at seventy-two (72) hours before the time appointed for holding the general meeting, as certified by The Central Depository (Pte) Limited to the Company.

Health Management International Ltd(Company Registrat ion No. 199805241E)

7 Temasek Boulevard #12-10Suntec Tower OneSingapore 038987

T (65) 6804 9888F (65) 6253 8259

www.hmi.com.sg

He

alth

Ma

na

ge

me

nt In

tern

atio

na

l Ltd

An

nu

al R

ep

ort 2

01

6

passion for healthcare - hmi.com.sgvision improving lives through quality healthcare to be a leading...

Documents